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Construction Insurance

Saudi Central Bank: Construction Insurance is MANDATORY

Saudi Central Bank: Construction Insurance is MANDATORY

Based on the powers granted to the Arab Monetary Agency –then, and Saudi Central Bank for now– to monitor cooperative insurance companies, it issued its Decree No. 441/187 on 5/8/1441 AH, which has bound contractors in non-governmental sector projects to ensure against hidden defects that might appear in constructions. Such insurance shall remain effective for a period of not less than ten (10) years, starting from the date of project final delivery.

Saudi Central Bank

What is a hidden defect?

To clarify, a hidden defect is any defect that arises in the construction work or its protective elements that may weaken or destabilize the construction due to errors, faults, deficiencies in design, implementation, quality of materials used, or a failure in soil inspection or whatsoever defects pertaining to human involvement.

Therefore, and pursuant to the provisions of this Decree, each non-governmental Employer/Owner will have to engage their contractor(s) through (Baladiبلدي ) service where Employer will have to attach a valid insurance document against hidden defects that might appear in the project(s) involved for a period of no less than ten (10) years starting from the date of project final delivery. Afterward, the Certificate of Occupancy will be issued. For Certificate of Occupancy, the following requirements must be met:

1. Payment of insurance premiums owed to the insurance company.

2. The insurance company to receive “Safety Confirmation Certificate”.

3. The insurance company renders a clear representation of the policy validity.

CONCLUSION

As of Decree date, an effective insurance policy against hidden defects has become a prerequisite for all types of projects and new constructions in the non-governmental sector to obtain a certificate of occupancy with the aim of preserving the material rights of the beneficiaries of those buildings.

 

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Construction Real Estate

Idle Land Progam Phase II Kick-off

Idle Land Program Phase II Kick-off

Phase II of Idle Lands Program has been launched in 17 new cities by the Ministry of Housing

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What is an Idle Land?

Idle lands are vacant or undeveloped plots designated for residential or commercial use and situated within the boundaries of a city as defined by the Saudi Shoura Council back in May 2013 within their regulation that enacted Idle Land Program that is applicable to all urban areas across the country.

What is Idle Land Program?

Idle Land Program charges an annual fee for non-governmental idle lands with sole or Joint ownership with a rate of 2.5% of the land’s actual market value. The Ministry of Housing will use the fee income on housing projects and infrastructure to supply housing solutions and products.

Idle Lands Program Objectives

What is new about the Idle Lands Program?

In phase II, developed lands owned by one proprietor in an approved housing scheme exceeding 10,000 square meters in 17 additional cities, including 5 cities before the end of 2020 will also be liable to pay the fee.

The implementation of this program will start in five cities namely; Medina, Abha, Khamis Mushayt, Taif, and Jizan

As per studies conducted by the program team, this program will be applied to the rest of the cities during this year 2021, and that it will include an increase in the supply of developed lands.

ILP phase II aims at lands belonging to a single owner in an approved scheme, with a total area of ​​more than 10 thousand square meters.

The total of the lands subject to fees in the cities of Jeddah, Riyadh, Dammam, and Makkah has reached 411 million square meters, and the total payment issued by the program since the beginning of its implementation has reached about 5,500 payment orders.

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The total of the lands subject to fees in the cities of Jeddah, Riyadh, Dammam, and Makkah has reached 411 million square meters, and the total payment issued by the program since the beginning of its implementation has reached about 5,500 payment orders.

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Conclusions

Compliance

As a result, landlords subject to Idle Lands Programs are highly recommended to commence developing their idle lands as soon as possible. Otherwise, they are faced with ever-stricter legal requirements and increasing costs of compliance to hold ownership of idle lands.

Appeals

Once fined, a landlord may appeal in writing to a committee formed by a decision of the Minister of Housing, within 60 days from the date he was notified of the fine decision.

Penalties and fines

He shall be punished with an additional fine not exceeding the amount of the fee owed on his land, and this shall not prejudice his obligation to pay the due fee.

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Automation Construction Real Estate Technology

Nafith Platform Launch

Nafith Platform Launch​

Phase II of Idle Lands Program has been launched in 17 new cities by the Ministry of Housing

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OVERVIEW

On Sunday, 8/26/1441H corresponding to 4/19/2020, Minister of Justice, Dr. Walid Al-Samaani, launched Nafith Platform that allows individuals and corporates to electronically create, save, and manage execution bonds in a safe and reliable environment.

Such inauguration took place with the participation of the ministers of commerce, housing, communications, and the governor of the Saudi Central Bank to ensure the most integration possible across Saudi concerned agencies.

The platform provides a digital bond service where the beneficiary/user can create, issue, and have bonds approved by counterpart users, follow up on their status, view their details around the clock, and have such bonds linked to and monitored by the Ministry of Justice and courts of execution to facilitate enforcement thereof.

Nafith Objectives

Nafith comes as a part of Vision 2030 and the MoJ’s efforts for engaging the private sector under the National Transformation Program as well as an increased shift towards digital services and platforms.

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