Asharq Alawsat reports that the Saudi Shoura Council has approved the first law permitting mortgages in the Kingdom. The article, actually a Reuters piece, cites the fact that most Saudis do not own homes: perhaps as few as 22% do, a far lower percentage than in the US or EU. With inflation and speculation driving up the price of homes, some relief is needed.

The bill, though, doesn’t go far enough, say some critics. They note that under this new law, 85% of potential borrowers could not qualify for a mortgage and that it will benefit only those already involved in real estate and land speculation. The piece notes, too, that the Saudi stock market crash of 2006 has still left many unable to come up with down payments. Interesting.

Saudi Council Approves Mortgage Law Amid Doubts

RIYADH, (Reuters) - Saudi Arabia’s quasi-parliament has approved a draft of the long-awaited mortgage law, paving the way for its approval by the government to allow more Saudis to own property and for banks to diversify income sources.

The advisory Shura Council, whose 150 members are appointed by the king, on Tuesday ended a debate on four components of the mortgage law, state news agency SPA reported late on Tuesday.

The law, which has been in the works for almost a decade, is hoped to allow much wider access to property ownership in a country where only one out of five Saudis owns a home, according to some realtors.

The approval also comes at a time when Saudi Arabia, the world’s largest oil exporter, is struggling to manage excessive liquidity from record oil receipts while the government is under greater public scrutiny over the use of this wealth.

The draft was heavily criticised by some.
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