Saudi Arabia issued final regulations on real estate financing, leasing and supervision of financial firms as the kingdom works to ease a housing shortage by opening up its mortgage market and enacting the country’s first home-loans law. The regulations outlining three of the five laws that make up the package of changes were posted Sunday on the website of the Saudi Arabian Monetary Agency.
Rules on the enforcement of foreclosures and mortgage registrations have yet to be completed.
The package goes into effect when regulations for the two remaining laws are finished and once the final version of the legislation is publicized in the official newspaper, which should be in the next few weeks, said Abdel-Aziz al-Gasim, the managing partner at Abdel-Aziz al-Gasim Law Firm who was involved with drafting the mortage measure.
The mortgage legislation, which has been debated for more than a decade, will overhaul the kingdom’s home-finance market, from registering mortgages to allowing judges to prosecute police officers who fail to carry out eviction orders.
The changes could boost residential lending to about $32 billion annually, according to estimates by Capitas Group International Ltd., a Saudi company focused on Islamic finance.
The law “will transform home financing in Saudi Arabia to property-secured lending from the current practice of extending loans based on salary assignment, or banks’ automatic deductions from borrowers’ salaries to repay home loans,” according to a Standard & Poor’s report on Feb. 18.