The Ministry of Labour and Social Development has announced that a tenancy agreement authenticated by the Ministry of Housing will be mandatory for the renewal of work permits in Saudi Arabia beginning in September 2018. The attested contract will also become obligatory for those seeking new work permits; however, the exact implementation date of this new requirement for first-time applicants has not yet been announced. Read more on the topic in this alert here.

The move comes a few months after the official launch of the electronic platform, called ‘Ejar’, through which individuals can register their lease contracts with the Ministry of Housing. ‘Ejar’ was created at the request of the Council of Ministers during their decision to regulate the housing market in the Kingdom, issued in 2017.

How does the tenancy agreement in Saudi Arabia impact employers?

Although the registration and authentication processes are very straightforward, the new law is likely to impact the overall time necessary to complete the immigration process in Saudi Arabia. It will add to the costs of obtaining employment status and will complicate matters for those who share accommodations. Ultimately, it is not uncommon for companies to accommodate their staff in serviced apartments with tenancy agreements issued in the name of employers – will labour authorities accept such contracts?

It is too early to answer this question, but employers should be prepared to amend tenancy contracts to ensure that the occupant’s name is reflected in the lease. It is possible that they may need to issue a clarification letter in the event that an amendment is not possible. Moreover, it is important to note that only contracts prepared in a template provided by Ejar will have legal and administrative effect.