Vacancy Rate
Synonyms: Vacancy Ratio، Void Rate، Unit Vacancy
Last updated: 2026-09-25
Short Definition
The vacancy rate is the share of unleased units in the total lettable units of a property or portfolio over a given period, calculated as vacant units divided by total units times 100, or more precisely on a day basis: total vacant days across all units divided by total available days.
Calculate it: Rental Yield CalculatorOverview
Legal Basis
No law defines 'vacancy rate' as a metric, but long-term vacancy of buildings falls under the White Land and Vacant Properties Fees Law as amended by Royal Decree M/244 dated 7/11/1446H, which imposes an annual fee as a proportion of fair rent capped at 5% of the property's value (the Council of Ministers may raise it to 10% on the ministerial committee's proposal), and under its Implementing Regulation for Vacant Property Fees issued by the Ministry of Municipalities and Housing in 2026, which treats a building as vacant if unused for 6 months in the reference year and below minimum utility consumption. In Riyadh, the rent of previously leased vacant units has been fixed at the last lease since 25 September 2025.
Practical Example
A 50-unit portfolio in Dammam has an average rent of SAR 30,000 per unit a year (SAR 1,500,000 at full occupancy). Over the year, vacant days across all units total 1,460 out of 18,250 available days (50 × 365), a vacancy rate of 8% and about SAR 120,000 of lost income. The manager finds that 6 units stayed empty for more than 3 months because they were priced above market and needed refreshing. After repricing and a light refurbishment costing SAR 18,000, vacancy falls to 4% the following year, recovering about SAR 60,000 of income. The owner also notes that long vacancy without acceptable justification, in cities where the vacant property fee applies, can expose the building to the fee under the regulation's criteria.
Common Mistakes
- ✗Measuring vacancy by counting units on a single day instead of vacant days across the period, which hides seasonal vacancy.
- ✗Treating a unit as occupied just because a lease exists even though the tenant is not paying, ignoring economic vacancy.
- ✗Keeping a unit empty for months waiting for a higher price, even though one vacant month equals about 8.3% of a year's rent.
- ✗In Riyadh: pricing a previously leased vacant unit above its last Ejar contract, which breaches the freeze provisions.
- ✗Overlooking vacant property fees when leaving a building unused for a long period in a city where the fee applies.
International Differences
The vacancy rate is a key indicator in all real estate markets, published by statistics agencies and consultancies for major cities. Charging fees or taxes on vacant homes has international precedents, such as Vancouver's Empty Homes Tax and France's tax on vacant dwellings. The Saudi model stands out for linking the fee to fair rent with a cap of 5% of property value, for clear criteria on vacancy duration and utility consumption, and for applying it to cities and areas designated by the minister rather than nationwide.
