On September 25, 2025, Saudi Arabia introduced one of its most significant property market regulations in decades. The Council of Ministers approved the Regulatory Provisions Governing the Relationship Between Lessor and Lessee, under the directive of His Royal Highness the Crown Prince. At the heart of this regulation lies a bold decision: suspending annual rent increases for both residential and commercial properties in Riyadh for five years, with rental values fixed at the level of the most recent contract.

The Ejar platform clarified that contracts signed before the regulation’s entry into force will remain enforceable. This applies in cases where rent increases had already been contractually agreed. The freeze does not apply retroactively. It governs only new or renewed contracts executed after September 25, 2025. Operated under the supervision of the General Real Estate Authority (REGA), Ejar serves as the government’s official system for recording, monitoring, and enforcing lease agreements across the Kingdom.

The regulation also stipulates that lease contracts are deemed automatically renewable unless a landlord issues a 60-day notice. Even then, termination is only permitted in limited cases such as tenant default, serious structural issues, or when the property is required for personal use. To strengthen transparency, all contracts must also be registered electronically through Ejar, creating a unified digital database that improves oversight and ensures compliance.

For legal practitioners and investors, this regulatory framework redefines the scope of real estate due diligence (LDD). Where due diligence once concentrated on ownership verification, encumbrances, zoning, and enforceability of leases, the fixed-rent environment forces a more forward-looking assessment. It is no longer enough to check whether a lease exists and is legally valid. Instead, the focus has shifted toward the financial resilience of properties under a market where landlords cannot raise rents for half a decade.

Consider, for example, an office building in central Riyadh. In the past, the primary concern was whether leases were valid and transferable. Today, the key question is whether the fixed rents will support the property’s financial performance over the next five years. That means analyzing tenant payment history, maintenance standards, and market positioning to determine whether the property can sustain stable income without future rent adjustments. These practical considerations illustrate a broader transformation in the role of due diligence.

This change turns due diligence from a compliance checkpoint into what could be described as a resilience test. Properties with reliable, long-term tenants are likely to remain profitable, even with moderate yields. Newly built or vacant buildings may struggle to achieve projected returns without the ability to raise rents. The dynamic encourages investors to pay closer attention to tenant quality, asset sustainability, and property management, moving away from short-term yield chasing toward a model focused on endurance and long-term stability.

These shifts are already reshaping investment priorities. Instead of competing primarily on rental returns, many investors are expected to look toward capital appreciation and wealth preservation. Landlords, on the other hand, may feel greater pressure to improve maintenance standards, services, and overall property quality as tenants gain stronger negotiating power.

The reforms also align with the broader national agenda under Vision 2030, which seeks to create sustainable, livable urban centers. By stabilizing the rental market, the government is providing households with cost certainty, landlords with predictability, and investors with a more reliable basis for long-term planning. The ultimate question may be whether this framework will also encourage owners of undeveloped “white lands” to move forward with development plans and lease their properties at market-clearing rates. Unlocking such opportunities could generate higher investment returns over the next five years while at the same time supporting Riyadh’s broader urban growth agenda.