Saudi Arabia.. Adoption of the Executive Regulation for the State Lease of Real Estate

The official Umm Al-Qura newspaper published the state lease of real estate executive regulations in Saudi Arabia, which aims to regulate state lease operations through government agencies in according to the needs of the authorities.

The regulation, published on Friday in the Official Gazette, says it takes into account the rationalization of the financial costs of government agencies that rent properties, in order to develop the exploitation of properties rented by government agencies.

The regulation contains provisions to strengthen the principles of governance and establish the principles of transparency and efficiency in the leasing of buildings by public entities and defines the role of the State General Authority for Real Estate Assets in supervising the leasing of buildings by public entities. public entities.

The regulation provided that the lessee public body could – subject to the approval of the authority – sublet the leased property to others or assign it to another public body without the consent of the lessor in compliance with several controls, including (the period of the sub-lease should not exceed the term of the basic lease, and that thearea object of the lease is or the assignment exceeds the actual needs of the public body, in so as not to conflict with his future property needs, in addition to the value of the sublease contract equal to the value of the basic contract – in proportion toarea leased – if the contract was concluded with another public body, and that the percentage of thearea must not exceed To rent the (25 %) of thearea Property).

Controls include adhering to government agency regulations, decisions, instructions, and procedures it follows in leasing and investing government real estate, as well as providing the Non-Oil Revenue Development Center with a copy of the lease agreement .

The regulation also provided that, taking into account the provisions of theart. 10 of the regime, the authorized government body may – subject to authorization by the Authority – extend or renew the contract before expiry according to the following provisions:

(A)- The contract must contain a provision requiring its automatic renewal for a similar period or periods with the same provisions unless one of the parties communicates to the other through the portal or by registered mail to its address indicated in the contract its reluctance to renew before the end of the contract period for a period of not less than 180 days for contracts with a duration of more than one year and for a period of not less than 60 days for contracts with a duration of not more than one year.

(B) – The public body – subject to the approval of the Authority – may agree with the lessor to include in the contract a provision that allows the state body to extend it beyond the end of its first term for a period not exceeding the base period a its unquestionable judgment without the consent of the landlord, ed in in this case it is lawful to stipulate in the contract an increase in the rent not exceeding 5% if the extension is for one year, and the rent not exceeding 10% if the extension is longer than one year, in in this case the public body must notify the lessor of the decision to extend referred to in this paragraph not before the expiry of the contract 90 days for contracts with a duration of more than one year, and a period of no less than 30 days for contracts with a duration of not exceeding one year.

(c) – If the lessor notifies the government agency of its reluctance to renew the lease under its own provisions, the government agency will negotiate with it – after approval of the authority – to renew the lease and increase the annual rent being guided by the price market, provided that the increase does not exceed 5% of the rent if the extension is for one year, and does not exceed 10% of the tariff if the extension is for more than one year. If the landlord refuses to renew the contract by increasing the annual rent in compliance with the provisions of this paragraph, the lessee governmental entity coordinates with the Authority to obtain its approval to lease another property in compliance with the provisions of the law and regulations or to extend the contract in compliance with the provisions of subparagraph (b) of paragraph (2) of this article if your contract allows you to extend it without the owner’s consent.

(D) – Before renewing or extending the contract, the public body must ensure that the property satisfies the conditions set out in article 6 of the system and that the checks set out in article 4 of the system are fulfilled.