The official newspaper Umm Al-Qura published an executive regulation of the state leasing of real estate in Saudi Arabia, the purpose of which is to regulate state leasing operations through public bodies in accordance with the needs of the authorities.
The ruling, which was published in the Official Gazette on Friday, said that it takes into account the rationalization of the financial costs of state bodies renting real estate in order to develop the exploitation of real estate leased by state bodies.
The Decree included provisions to strengthen the principles of governance and establish the principles of transparency and efficiency in the leasing of real estate by state bodies, and also determined the role of the General Directorate of State Real Estate in supervising the lease of real estate by state bodies.
The provisions provided that the leasing public agency could – after approval by the authorities – sublease the leased real estate to other persons or assign it to another public agency without the consent of the landlord in accordance with several control provisions, including (the period should not exceed the term of the main contract, and that the area to be leased amounts to or transfers it in excess of the actual need of the state body, in a manner that does not contradict its future need for property, in addition to the cost of the sublease agreement is equal to the cost of the main agreement – in proportion to the area rented – if the agreement was concluded with another state authority, and that the percentage of area must not exceed Leased on (25%) the area of the lot).
Control includes compliance by the public authority with the rules, decisions, instructions and procedures applicable to the lease and investment of public real estate, in addition to providing the non-oil revenue development center with a copy of the lease agreement.
The provisions also provided that, subject to the provisions of article 10 of the system, the competent public authority may – after the approval of the Authority – extend or renew the contract before its expiration, in accordance with the following provisions:
(A)- The contract must include a clause requiring it to be automatically renewed for a similar period or periods with the same provisions, unless one of the parties notifies the other through the portal or by registered mail to the address specified in the contract of its unwillingness to renew before the end of the term validity of the contract for a period of at least 180 days for contracts whose validity period exceeds one year, and for a period of at least 60 days for contracts whose validity period does not exceed one year.
(B) – The Public Authority – upon the approval of the Authority – may agree with the landlord to include a clause in the contract that allows the Public Authority to extend it after the end of its first term for a period not exceeding the base period. at its own discretion without the consent of the landlord, in which case it is allowed to provide for an increase in the rent in the contract No more than 5% of it upon extension for one year, and no more than 10% of the rent if the extension is made for more than one year. In this case, the public authority must notify the landlord of its decision to extend in accordance with this paragraph at least before the end of the contract. 90 days for contracts lasting more than one year. and a period of at least 30 days for contracts whose duration does not exceed one year.
(C)- If the landlord notifies the public authority of his unwillingness to renew the contract with the same provisions, the public authority must negotiate with him – after the approval of the Authority – an extension of the contract and an increase in the annual rent, guided by market conditions. prices, provided that the increase does not exceed 5% of the fare when renewed for a year. One, and does not exceed 10% of the fare when renewed for more than one year. If the landlord refuses to renew the contract by increasing the annual rent in accordance with the provisions of this paragraph, the leasing public entity shall coordinate with the Authority to obtain its permission to lease other property in accordance with the provisions of the Law and Regulations or to extend the contract in accordance with the provisions of subsection ( b) paragraph (2) of this section if her contract allows her to extend it without the consent of the landlord.
(D) – Before renewing or extending a contract, the public agency must ensure that the property complies with the conditions provided for in Article 6 of the system and that the control measures provided for in Article 4 of the system are followed.
