The Council of Ministers, chaired by Custodian of the Two Holy Mosques King Abdullah, approved on Monday the much-awaited mortgage law, which would regulate the Kingdom's real estate financing and investment, and boost its mortgage market.
Finance Minister Ibrahim Al-Assaf said the mortgage law, which was passed by the Cabinet, would develop a new real estate finance market in the Kingdom. It will also help Saudis get Shariah-compliant finance to build their homes.
Al-Assaf said the Saudi Arabian Monetary Agency (SAMA) would allow banks and licensed companies to finance real estate projects. The state-owned Public Investment Fund can participate in the new real estate holding companies to be licensed by SAMA.
"The law gives necessary flexibility to make optimum use of real estate and movable assets in the country," Culture and Information Minister Abdul Aziz Khoja said while explaining the Cabinet decisions.
SAMA Gov. Fahd Al-Mubarak said his organization is honored for being given the privilege to supervise the real estate financing sector and non-banking financial firms. He said the executive bylaw drafted by SAMA for real estate financing sets its operation mechanism and protects the rights of consumers.
"This has been a great day for the housing sector. These long awaited laws will contribute tremendously to the development of real estate sector. It will also allow the financial sector to play a bigger role in mobilizing adequate resources to meet the domestic demand for housing.
The developers in Saudi Arabia should take advantage of the issuance of the laws by expediting their projects. The creation of a well regulated market will also help many other sectors which are connected to the real estate sector," said Khaled Al-Aboodi, CEO and general manager of Islamic Corporation for the Development of Private Sector (ICD), a private sector arm of the Islamic Development Bank Group.
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