He made a promise and kept it. I am talking about Custodian of the Two Holy Mosques King Salman who issued a decree regarding vacant plots of land. “We are determined, by the strength of Allah, to find practical and drastic yet urgent solutions that ensure that every citizen will have appropriate housing,” he said.
What were once aspirations have now materialized thanks to the Custodian of the Two Holy Mosques. Taxes have now been imposed on plots of land located inside urban areas.
Unscrupulous businessmen who monopolize the real estate industry by hoarding land and then selling at extortionate prices at the expense of hardworking members of the public will no longer be able to do so. Their greediness will come to an end because of the government's wise decision.
You can imagine what the situation was like before the resolution came into force. The price of land anywhere in the world is 25 to 30 percent of the total value of the building that occupies it. In the Kingdom, this is the other way around. The land will comprise 70 percent of the total cost of the house. It is an established fact that state-owned plots of land account for 70 percent of total land in the Kingdom's major cities. Residential units are available despite unscrupulous businessmen who are able to afford units at exorbitant prices. Only very few can do that. That is why the King's decision will resolve the root of the housing problem.
The price of land has started to decrease as a result of the royal decree, though the executive bylaws for taxes have not yet come into effect. Over time, those who monopolize land will feel the burden of taxes. This will be because of the decrease in the price of land and the increase in taxes.
Taxes will undoubtedly provide extra revenue for the government and will drive rent prices for homes and shops down, leading to more business activities in the real estate market as more people will be able to afford to buy land and build homes. Landlords who have raised their rent claiming that there is an increase in the price of goods and services will find themselves obliged to decrease rental prices to compete with other landlords.
When the price of real estate decreases and citizens are able to afford to buy property, the Ministry of Housing will be relieved of some of the burdens that it has been forced to shoulder.
