Guides

The Real Cost of Buying Property in Saudi Arabia

Published 7 August 2026 · Prop966 Editorial

The cost of buying property in Saudi Arabia is not the number on the brochure. Between transaction tax, agency fees, financing costs and the service charges that start the day you take the keys, the true figure sits meaningfully above the sticker price. This guide walks through every line so you can budget properly before you reserve anything.

The 5% Real Estate Transaction Tax

The single largest add-on is the Real Estate Transaction Tax (RETT), charged at 5% of the transaction value on property disposals in the Kingdom. Two points make it less painful than it first sounds:

1. It replaces VAT rather than adding to it. Real estate transfers are exempt from the 15% VAT that applies across most of the economy. RETT at 5% is the substitute, not an extra layer.
2. There is no annual property tax on homes. Many markets charge owners every year forever. Saudi Arabia does not, which materially changes the long-run holding cost of a home here compared with Europe or North America.

RETT operates under a dedicated law administered by the Zakat, Tax and Customs Authority, and it applies to foreign buyers on the same terms as Saudi buyers.

Who actually pays it

In practice the tax is generally settled on the seller side, but responsibility is negotiable between the parties and must be stated explicitly in the contract. On a SAR 2 million purchase, 5% is SAR 100,000, which is not a detail to leave to assumption. Ask the question in writing before you sign anything.

The main exemptions

Several transfers fall outside the charge, including:

• Inheritance and gifts between close family members
• Transfers to charitable and endowment bodies
• Certain corporate transactions, such as mergers and contributions of property as capital
• Court-ordered or judicial transfers
• Qualifying first-home purchases by Saudi citizens under government housing programmes, with relief applying to a capped portion of the value

Exemptions are conditional and documented at the point of transfer, so treat the list above as orientation and confirm your specific case with the authority or your lawyer.

Agency and brokerage fees

Where a licensed broker is involved, a commission of around 2.5% of the price is the common market reference. On off-plan sales bought directly from a developer, the developer frequently absorbs the sales cost, which is one quiet advantage of buying at launch. Confirm before you assume: ask who is paying the broker, and get the answer in the contract rather than in conversation.

Financing costs, if you are not paying cash

A mortgage introduces its own layer:

• Arrangement or processing fees charged by the bank at the outset
• Profit rate over the term, which is what a Sharia-compliant structure charges in place of interest
• Property valuation and life or property takaful where the lender requires it

Foreign buyers should assume stricter terms than Saudi nationals, including a larger deposit. Our guide to mortgages in Saudi Arabia covers eligibility, deposit expectations and how the Murabaha and Ijara structures differ.

Service charges: the cost that never stops

Every managed community charges an annual service fee for maintenance, security, landscaping and shared amenities. It is usually quoted per square metre of built-up area and it is a permanent line in your budget, not a one-off.

Ask for the current rate per square metre in writing before you reserve, and ask what it covered last year versus this year. A community with generous amenities carries a generous service charge, and an amenity-rich master plan that looks like value at purchase can look different once you have paid the fee five times.

A worked example

Take a SAR 2,000,000 apartment bought with a mortgage, with the buyer agreeing to bear the transaction tax:

The practical rule: budget 5% to 8% on top of the sticker price, depending on whether a broker is involved and who carries the tax. On a SAR 2 million home that is SAR 100,000 to SAR 160,000 of cash you need available at transfer, over and above the deposit.

Off-plan changes the timing, not the total

Buying off-plan spreads the purchase price across construction milestones instead of demanding it at once, and payments sit in a supervised escrow account rather than going straight to the developer. That improves your cash flow and your protection, but it does not remove the transaction costs. They arrive at transfer, which on an off-plan unit means at handover, potentially years after you reserved.

Plan for that. The most common avoidable mistake in off-plan buying is a payment plan that back-loads 30% to 40% to handover, meeting a buyer who budgeted for the instalments but not for the tax and fees landing in the same month. The full purchase sequence is set out in our step-by-step off-plan guide, and the escrow protections behind it are explained in how Wafi escrow works.

Before you commit

• Get the RETT responsibility in writing in the contract.
• Ask who pays the broker, if there is one.
• Get the service charge rate per square metre, and last year’s figure too.
• If financing, get the total cost of credit, not just the monthly payment.
• If you are not a Saudi citizen, confirm your eligibility to buy in that specific location first. The rules are set out in our guide to foreign property ownership in Saudi Arabia.

This is general information rather than tax or legal advice. Rates, exemptions and their conditions change, so verify current figures with the Zakat, Tax and Customs Authority and your own adviser before you transact.

References

Details in this guide are drawn from official Saudi regulatory sources (ZATCA, REGA) and public market disclosures, current as of August 2026.