KSA to require tenancy agreement for renewal and issuance of work permits

Background

The Ministry of Labour and Social Development (MLSD) has announced that from September 2018 a tenancy agreement authenticated by the Ministry of Housing will be required for work permit (Iqama) renewals. This follows the requirement for individuals to register their address with the National Post Service to prove their identity; which became mandatory in April 2018 for anyone holding a bank account.

What will this involve?

Authentication will be carried out through the government’s e-platform ‘Ejar’ by which tenancy agreements will be registered with the Ministry of Housing.  Ejar has introduced a standardised rental agreement which is to be used for residential and commercial tenancies.  It also facilitates payment of rent by electronic transfer through SADAD on a monthly or annual basis, as agreed by the parties.

What does this mean for employers and employees?

The need for a tenancy agreement to be authenticated through Ejar will likely add to the time needed to process Iqama applications and increase costs for expatriates working in the KSA. It will also complicate matters for employers who provide accommodation to staff and for individuals who live in shared dwellings.

Employers who lease accommodation on behalf of employees may need to amend tenancy agreements to ensure that the occupants are named in the lease. If this is not possible then it remains to be seen whether the MLSD will accept confirmation from the landlord and/or the employer (as the lessee) that the employee is the occupant of the dwelling.

Employees who are based outside of the KSA and hold an Iqama may find that the cost of renting accommodation is not feasible if they are working on a ‘fly in–fly out’ basis.

Initial work permit applications will also require a tenancy agreement, but no indication has been given as to when this will be implemented.

If you should require further advice, please contact Zahir Qayum and Mohsin Khan.