RIYADH — A decision by the Council of Ministers on Monday to impose tax on vacant plots of land in cities could help create more affordable housing, Al Arabiya News quoted experts as saying on Tuesday. “The Cabinet instructed the Council of Economic Affairs and Development to prepare organizational arrangements and mechanism for imposing tax on vacant plots of land within the urban boundaries of cities and provinces,” the Saudi Press Agency said. Mutlaq Al-Baqmi, editor-in-chief of the Maaal business newspaper, told Al Arabiya News that the tax will help generate enough land in the real estate market to help decrease house prices. “It is expected that after this decision, there will be an abundance of land which will lead to a decrease in house prices, making it easier for average citizens to buy land on which to build their homes,” he told Al Arabiya News. Some urban land in the Kingdom is owned by companies or wealthy individuals who prefer to hold it as an asset or trade it for speculative profits. The decision aims to reduce undeveloped land, enabling more Saudis to purchase property, Al-Baqmi said. The mechanism of application of the tax is yet to be announced. But Abdul Hameed Al-Amri, a financial analyst and member of the Saudi Economic Association, said it will depend on the size of the land, according to Al Arabiya.Net. But Al-Amri said the decision was in the interest of Saudi citizens. While the tax is expected to reduce house prices, Al-Baqmi predicts that some landowners would stick to the prices they have set to undermine the impact of the tax. If the tax is imposed as per a study published in the Maaal newspaper in 2014, in seven years' time, owners will pay a tax as high as the price they paid for the plot of land. In two to three years, Al-Baqmi expects real estate prices to noticeably decrease. — SG
