Letting property in Riyadh: rental caps, landlord tax duties and tenant eviction rules

Rental yield caps and rent controls in Riyadh

Under the Regulatory Provisions Governing the Relationship Between the Lessor and the Lessee, approved by the Cabinet and overseen by the Real Estate General Authority (REGA), all residential and commercial leases within Riyadh's urban boundaries are subject to a five-year freeze on rent increases taking effect from 25 September 2025. During this five-year period, landlords cannot raise annual rent amounts on existing contracts or automatically renewed leases.

For vacant residential units previously leased in Riyadh, rent levels must be benchmarked against the last registered contract recorded on the Ejar system. Unleased new-build properties may set initial rent prices by mutual agreement between the lessor and tenant. However, once registered, the agreed rent remains fixed under the five-year freeze framework. Landlords who breach these rent limits face fines of up to 12 months' rent for the property, alongside mandatory rectification orders.

Short-let regulation and licensing

Short-term holiday lets and corporate leases operate under distinct licensing regimes enforced by the Ministry of Tourism alongside REGA. Property owners seeking to offer short-term rentals must secure an operational license through the Ministry of Tourism portal before listing units on commercial booking channels.

Short-let properties must comply with strict municipal safety standards, including Civil Defense certification for fire safety, secure digital access control, and compliance with the National Spatial Reference System mapping regulations. Properties operating short-term rentals without valid Ministry of Tourism documentation face immediate suspension of operations and financial administrative penalties imposed by municipal inspectors.

Non-resident taxation on rental yields

Saudi Arabia imposes zero personal income tax on rental yields earned by non-resident individuals holding property in their personal capacity in 2026. Rental returns are not subject to direct income withholding tax for individual investors.

Acquisitions are subject to the 5% Real Estate Transaction Tax (RETT), which is managed by the Zakat, Tax and Customs Authority (ZATCA) and paid at the point of transfer before title deeds are issued via the Real Estate Registry (RER). If property management services, maintenance contracts, or agency fees are invoiced in the Kingdom, standard Value Added Tax (VAT) at a rate of 15% applies to those service transactions. Foreign corporate entities holding real estate through registered commercial entities incur corporate tax liabilities or Zakat depending on the exact vehicle structure approved by the Ministry of Investment (MISA) and ZATCA.

Property management and service charge structures

Management fees for long-term residential units in Riyadh typically range from 5% to 8% of annual collected rent when handled by REGA-licensed real estate brokers operating under the FAL licensing scheme. Service charges for shared building amenities, common area maintenance, security, and cleaning are governed by the Condominium Property Law.

Service charges vary based on building specification, with mid-tier residential developments averaging SAR 30 to SAR 60 per square metre annually, rising to SAR 100 to SAR 150 per square metre in prime luxury developments in districts such as Al Olaya or King Abdullah Financial District (KAFD). All owners' association funds and maintenance service charges must be handled through formal HOA accounts registered under REGA oversight.

Lease renewal, possession recovery and tenant eviction

Lease documentation in Saudi Arabia must be executed using the Unified Residential Contract on the Ejar platform. An Ejar-registered lease functions as an executive instrument under the Saudi Ministry of Justice, allowing landlords to take default claims directly to the Enforcement Court without filing a traditional lawsuit.

Contracts renew automatically unless either party issues written notice of non-renewal at least 60 days before contract expiry. However, within Riyadh's urban boundaries, a landlord cannot refuse lease renewal upon expiry unless one of three statutory exceptions applies: 1. The tenant defaults on rent payments or fundamental lease obligations. 2. The building suffers structural defects impacting public safety, as confirmed by an accredited government technical report. 3. The landlord or their first-degree relative requires the property for personal residence.

Where a tenant defaults on rent on an active Ejar contract, the landlord generates an administrative enforcement order directly through the Ministry of Justice Najiz portal. The Enforcement Court can freeze tenant bank accounts or issue eviction directives within weeks, making recovery of possession significantly faster compared to traditional court litigation.

General compliance notice

Property owners must complete all registration requirements through the Ejar platform and ensure property records are synchronized with the Real Estate Registry (RER) to maintain legal enforcement rights in Saudi courts.