The Big Freeze

They mark a turning point in Saudi leasing law, shifting from market-led rental dynamics to a system of regulated rent levels, automatic renewal obligations, and mandatory registration.

The Rental Provisions are initially focused on Riyadh but include mechanisms for expansion elsewhere.

Rent Freeze in Riyadh

At the centre of the Rental Provisions lies the introduction of a mandatory five-year rent freeze applicable to all residential and commercial properties located exclusively within Riyadh’s officially recognised urban boundary (al-nitaq al-‘umrani). This boundary is defined under Saudi municipal planning regulations and demarcates the area where development and zoning controls apply. As of 25 September 2025, the “gross rent” (al-ujrah al-ijmaliyah), which the law defines as the contractual rent plus any other payments due from tenant to landlord under the lease, must remain unchanged throughout the freeze period.

The law sets out three categories of properties, each with its own method of determining the applicable frozen rent:

1. Properties already under lease at the date of entry into force: the prevailing rent on 25 September 2025 is locked in and cannot be altered for five years (save for where escalation clauses are set out in the lease, as discussed below);
2. Properties previously leased but currently vacant: the rent is fixed at the total value of the last contract registered on the Ejar platform.
3. Properties never previously leased: the rent is established by mutual agreement between the landlord and tenant, but once agreed, it is frozen for the full five years.

Although not explicitly referenced in the Provisions, sub-leases are generally expected to align with the rent agreed in the head lease. This approach aims to discourage potential circumvention of the freeze through disproportionately high sub-leasing arrangements.

The Provisions distinguish between contracts depending on their date of execution. Escalation clauses in leases concluded prior to 25 September 2025 remain valid and enforceable, meaning that such leases may still reflect scheduled rent increases if already agreed between the parties. By contrast, leases concluded on or after 25 September 2025 may not apply escalation provisions during the freeze period, even if the lease extends beyond five years. This effectively neutralises rent growth for all new contracts entered into during the freeze.

Landlord Objections

Although the rent freeze is comprehensive, the Rental Provisions establish a limited objection mechanism for landlords who can demonstrate that the fixed rent no longer reflects the property’s actual condition or value. Landlords may petition the Real Estate General Authority (“REGA”) in the following circumstances:

• Where the property has undergone substantial structural or construction works (beyond ordinary maintenance) that materially increase its rental value.
• Where the last lease agreement for the property was concluded before 2024, such that the frozen rent is no longer reflective of present-day market conditions.
• Where the Board of Directors of REGA identifies other qualifying scenarios through regulatory guidance.

The law requires that such objections be submitted directly to REGA, which will issue detailed procedures, evidentiary requirements, and criteria for determination. While this process provides landlords with a potential avenue for relief, it is intentionally narrow and subject to strict regulatory oversight. The regime therefore prioritises tenant protection and market stability over landlord flexibility.

Automatic Lease Renewal

A second pillar of the Rental Provisions is the introduction of automatic lease renewal throughout the Kingdom. Unless one party provides at least sixty (60) days’ notice of its intent not to renew, lease contracts are deemed to renew automatically on expiry. This applies regardless of whether the lease is residential or commercial, and represents a shift from freedom of contract to statutory continuation rights.

For properties located within Riyadh, tenants benefit from additional statutory protections. Where a tenant expresses a desire to renew, landlords are not permitted to refuse renewal or compel the tenant to vacate the premises except in specifically enumerated cases:

• Non-payment of rent by the tenant;
• Existence of serious structural defects that affect the safety of the property or its inhabitants, as verified by a competent governmental authority through a technical report;
• The landlord’s intention to occupy a residential property personally, or to make it available for occupation by a first-degree relative;
• Other circumstances recognised by REGA’s Board, in accordance with published criteria.

These renewal protections significantly rebalance landlord-tenant relations. They strengthen the position of tenants, particularly in Riyadh where affordability and housing pressures have been acute, while reducing landlords’ discretion in terminating lease relationships.

Exceptions

The Provisions set out two explicit exceptions to the automatic renewal requirement:

• short-term contracts: Fixed-term leases with ninety (90) days or less remaining at the time these Provisions came into effect are excluded from automatic renewal; and
• mutual termination after the notice deadline: Where both parties agree by mutual consent to terminate the lease after the deadline for submitting a non-renewal notice has passed.

Mandatory Registration on Ejar

All landlords are required to register leases through Ejar. Where a landlord fails to do so, the tenant is empowered to initiate registration unilaterally.

Once registration occurs, either party has sixty (60) days to object to the recorded contract data. If no objection is filed within this period, the data becomes legally conclusive and binding. 

The mandatory registration system is designed to enhance market transparency and data reliability. It will provide regulators, lenders, investors, and corporate occupiers with a comprehensive and enforceable record of lease transactions.

Enforcement and Penalties

The Rental Provisions introduce a robust enforcement framework. Violations—including unlawful rent increases, failure to renew without justification, or non-registration of leases, may result in fines of up to twelve months’ gross rent for the relevant property. In addition to fines, violators must remedy the breach and compensate the injured party.

Enforcement will be undertaken by specialised committees that have jurisdiction to investigate complaints, determine violations, and impose fines. Decisions may be appealed to the competent judicial authority, ensuring due process and judicial oversight.

The law also introduces a whistleblower mechanism to encourage reporting of violations. Individuals whose information results in a confirmed violation may receive up to 20% of the collected fine, provided they are not themselves part of the enforcement or regulatory apparatus. This incentive system mirrors approaches in other regulatory fields and is intended to strengthen compliance through community participation.

Next Steps

Given the sweeping nature of the Rental Provisions, stakeholders should act promptly to mitigate risks and position themselves for compliance:

• Landlords should immediately review their portfolios in Riyadh to determine which leases are subject to the freeze, confirm whether escalation clauses remain enforceable, and prepare documentation in case structural improvements justify an objection.
• Tenants should ensure their contracts are registered on Ejar and understand their enhanced rights to renewal and protection from eviction. Awareness of the sixty-day objection window following registration is critical.
• Developers and investors must revisit financial models and feasibility studies, particularly where assumptions relied on rental growth. Stress-testing valuations under a zero-growth rent scenario for five years is essential.
• Corporate occupiers should integrate the automatic renewal provisions into their occupancy planning, ensuring notice procedures are embedded in lease management systems.
• Compliance teams should establish protocols to monitor REGA’s forthcoming procedural regulations on objections, renewal exceptions, and penalties, as these will shape the practical enforcement environment.
• Strategic planning should include scenario modelling for the potential extension of the freeze to other cities, given REGA’s authority to expand the regime beyond Riyadh.