Foreign Property Ownership Fees in Saudi Arabia: 2% Fee in 4 Cities, 5% Tax & Executive Regulations Details

With the publication of the Executive Regulations of the Law of Real Estate Ownership by Non-Saudis in the official Umm Al-Qura gazette in early July 2026, the picture is finally complete for foreign investors. After the state defined the geographical zones permitted for ownership, it is now the turn of the most practically important question: How much is the actual cost? And what are the procedural conditions that must be fulfilled? In this report, we review the details of fees, taxes, procedures, and penalties as stated in the regulations.

First: Fees and Taxes Structure

The cost structure is based on two separate elements, neither of which replaces the other—a point of confusion for many investors:

The first element is the Real Estate Transaction Tax at a rate of 5%, which applies to all real estate disposal operations across various cities of the Kingdom, whether the disposer is a Saudi or non-Saudi citizen, without discrimination.

The second element is an additional fee of 2% imposed on the value of a non-Saudi's transaction involving real rights on real estate located inside four cities specifically: Riyadh, Jeddah, Makkah Al-Mukarramah, and Al-Madinah Al-Munawwarah.

The fundamental point here, as explained by market experts, is that the 2% fee does not replace the 5% Real Estate Transaction Tax, but rather is added to it. As for the rest of the Kingdom's regions outside these four cities, they remain subject to the Real Estate Transaction Tax only, without the additional fee.

Illustrative Example

To clarify the picture, let's assume a non-Saudi investor buys a property worth one million riyals:

• If the property is within the geographical zone in Riyadh, Jeddah, Makkah, or Madinah: The 5% Real Estate Transaction Tax applies in addition to the 2% additional fee.
• If the property is in another region of the Kingdom within the permitted zones: Only the Real Estate Transaction Tax applies.

It is always advised to verify the exact calculation through the competent authorities, as the calculation mechanism varies depending on the type of transaction and its approved value.

Second: Cases of Fee Exemption

The regulations took social and legal aspects into account, stipulating the application of a zero rate in several cases that do not aim to achieve commercial gains, most notably:

• Division of inheritance among heirs.
• Final judicial rulings.
• Expropriation for public utility.
• Certain disposals made without consideration for the benefit of endowments or public legal entities.

These exemptions reflect a balance in legislation between regulating the market and collecting revenues on one hand, and considering humanitarian and legal cases on the other.

Third: Procedural Conditions for Individuals

The regulations stipulated that non-Saudi natural persons must fulfill three basic requirements before commencing ownership procedures:

1. Obtaining a digital identity.
2. Opening a bank account inside the Kingdom.
3. Issuing a Saudi contact number linked to the digital identity.

The Saudi Central Bank has directed banks to open bank accounts for individuals and entities covered by the law, with strict controls including: verifying the client's identity through reliable sources, prohibiting joint accounts or authorized signatories from outside the Kingdom, and restricting the use of the account solely to real estate ownership purposes without issuing payment or credit cards.

The regulations also mandated executing all payments related to ownership or transaction operations through approved electronic payment methods in accordance with the Central Bank's regulations, thereby enhancing transparency and limiting undocumented cash transactions.

Fourth: Regulations for Family Members' Ownership

Among the important details that an investor might overlook is that the regulations specified clear controls for the property ownership of a non-Saudi's family members. The non-Saudi spouse and children are considered dependents of the applicant regarding real estate designated for residential use, and none of them is permitted to own a residential property independently, except in two cases: the termination of the marital relationship, or one of the children reaching twenty-five years of age.

This control prevents circumventing the law by distributing ownerships within a single family, and it must be taken into account when planning a family real estate portfolio.

Fifth: Regulations for Companies

Regarding legal entities, the regulations obliged non-Saudi companies to register with the Ministry of Investment before owning any property, while disclosing direct and indirect owners, and opening a bank account inside the Kingdom.

It also required the company to notify the Ministry within 15 days in the event of a transfer of 5% or more of its ownership, or when there are arrangements that grant any party influence over its decisions or limit its independence.

The regulations allowed unlisted Saudi companies, in whose capital non-Saudis participate, to own real estate outside the geographical zone—except for Makkah Al-Mukarramah and Al-Madinah Al-Munawwarah—for two specific purposes only: practicing their activities, and housing their workers.

Sixth: Penalties and Violations

The regulations tightened penalties to ensure serious compliance. For any non-Saudi who provides incorrect or misleading information leading to their ownership of real estate, the fine can reach up to 5% of the value of the real right subject to the violation, not exceeding ten million riyals, along with the sale of the real right to the property.

Graduated fines were also imposed on companies that provide incorrect information regarding their actual need for the real estate, and on anyone who obstructs the inspectors' work or fails to correct violations within the specified deadline.

The Electronic Portal and the Real Estate Registry

The regulations stipulated the creation of an electronic portal under the Real Estate General Authority to submit applications for ownership, acquiring real rights, and transacting them, provided it is linked to the Real Estate Registry. The platform provides investors with information related to areas permitted for ownership, available projects, real estate units, requirements, and fees, making the investment journey clearer and more transparent.

Analytical Reading: What Do These Costs Mean for the Investor?

When evaluating the additional 2% fee, it should be put into its proper context. It applies exclusively to the four most attractive and high-demand cities, which are the cities where mega-projects and high returns are concentrated. When compared to other regional markets, the cost of entry remains competitive, especially given the absence of personal income tax on individuals.

The most important thing for the investor is to calculate these fees within the total cost of investment from the very beginning, rather than discovering them later. The difference between buying a property inside or outside the four cities directly reflects on the net yield and must enter into the trade-off between available options.

Conclusion

The Executive Regulations complete the picture started by the geographical zones map, granting foreign investors a clear framework of fees, conditions, and obligations. The golden rule today: calculate your full cost (Real Estate Transaction Tax plus the additional fee if the property is in one of the four cities), fulfill your procedural requirements early, and strictly adhere to disclosure to avoid severe penalties. With this regulatory clarity, the Saudi market becomes a safer and more attractive destination for long-term investment.