Property TypesVacation Rental
Synonyms: Short-term rental، Holiday let، Holiday home rental، Private hospitality unit
Last updated: 2026-10-05
Short Definition
A vacation rental is the nightly letting of an independent furnished unit, such as a chalet, rest house (istiraha), holiday home or apartment, to tourists for short stays; in Saudi Arabia it is a hospitality activity requiring a Ministry of Tourism permit or licence, not merely a lease.
Overview
A vacation rental is the nightly letting of an independent furnished unit, such as a chalet, rest house (istiraha), holiday home or apartment, to tourists for short stays; in Saudi Arabia it is a hospitality activity requiring a Ministry of Tourism permit or licence, not merely a lease. It serves domestic tourism during seasons, holidays and weekends.
For individuals it is governed by the Private Hospitality Unit Regulation, issued by decision of the Minister of Tourism, published in the Umm Al-Qura Gazette on 11 September 2026 and in force from publication. It defines the unit as a private, independent property unit providing tourists with overnight stays for a fee, which may not be operated without a Ministry licence. Licence conditions include: the applicant must be a Saudi national or a non-Saudi who owns the unit; he must provide an electronic title deed or proof of his right to use the unit for the whole licence term; the unit must be in a residential, agricultural or mixed residential-commercial property; the owners’ association bylaws and decisions in a jointly owned building must not bar or restrict daily letting; he must subscribe to the Shomoos system; and he may hold no more than three licences in one jointly owned property, while anyone whose valid licences would exceed three must submit a valid contract covering maintenance and cleaning for all his licensed units. A licence lasts no more than one year, and the application fee is SAR 1,100. The licensee may take bookings and payments only through travel and tourism service providers, may not host a tourist for more than 29 consecutive days or more than 90 days in the same unit during the licence term, and may not open the unit after check-in without the tourist’s permission or the security authorities’ approval. Companies that operate chalets and holiday homes commercially fall instead under the hospitality facility licence, since the private hospitality unit licence is limited to natural persons.
Since 1 January 2025 booking platforms may not list any unpermitted unit, so the permit has become a practical condition for reaching guests. For tax, temporary accommodation is excluded from the residential-lease exemption, and VAT registration is required once taxable supplies exceed SAR 375,000. Describing a vacation rental simply as a unit listed on platforms, without mentioning the permit, is therefore inaccurate in the Saudi context.
⚖️ Legal Basis
Private Hospitality Unit Regulation, issued by decision of the Minister of Tourism and published in the Umm Al-Qura Gazette on 11 September 2026 under the Tourism Law issued by Royal Decree M/18 dated 26/1/1444H; licences are issued by the Ministry of Tourism (Saudi applicant or non-Saudi owner of the unit, residential, agricultural or mixed residential-commercial property, maximum 3 licences per person in one jointly owned property, validity of up to one year, SAR 1,100 application fee, stays of no more than 29 consecutive days), with violations penalised under Article 16 of the Tourism Law, including fines of up to SAR 1,000,000. Stays bear 15% VAT where the supplier is registered, because Article 30 of the VAT Implementing Regulations excludes temporary accommodation from the residential-lease exemption.
💡 Practical Example
A Saudi citizen owns a chalet with an electronic title deed on a residential-use property north of Jeddah and wants to let it by the night. He applies for a private hospitality unit licence, pays the SAR 1,100 application fee and subscribes to the Shomoos system; after the Ministry inspects the chalet he receives a one-year licence. He lists the chalet and takes bookings and payments only through a licensed travel and tourism service provider: 10 weekday nights × SAR 600 = SAR 6,000 and 8 weekend nights × SAR 1,200 = SAR 9,600, a monthly income of SAR 15,600, or about SAR 187,200 a year if the rate holds. As this is below SAR 375,000, he is not required to register for VAT unless he has other taxable supplies. When the year ends he renews the licence; otherwise he can no longer list the chalet on booking platforms.
⚠️ Common Mistakes
- ✗Listing a unit on booking platforms without a permit — since 1 January 2025 unlicensed units may not be listed, and operating without a permit violates the Tourism Law, whose Article 16 allows fines of up to SAR 1,000,000.
- ✗Collecting rent from guests in cash or by direct transfer — the regulation forbids requesting or receiving any amount from a tourist except through the licensed travel and tourism service provider.
- ✗Letting a flat by the day in a jointly owned building whose owners’ association bylaws or decisions bar it — the absence of any rule barring or restricting daily letting is a licence condition.
- ✗Buying several units in one property for vacation letting without checking the limits — one person may hold no more than 3 licences in one jointly owned property, and anyone whose valid licences would exceed 3 needs a valid contract covering maintenance and cleaning for all his licensed units.
- ✗Forgetting to renew the licence — it lasts no more than one year, and Article 3 of the regulation bars operating after it expires.
🌍 International Differences
Many countries have moved to regulate vacation rentals after their spread through digital platforms. In the UAE, emirates such as Dubai require holiday homes to be registered and permitted by the tourism authority; Turkey has introduced a permit requirement for renting homes to tourists for short periods; and many cities worldwide impose registration or caps on the number of nights. The Saudi model stands out by limiting the private hospitality unit licence to natural persons who are Saudi nationals or non-Saudi owners of the unit, capping licences per jointly owned property, limiting a tourist’s stay to 29 consecutive days, and channelling bookings and payments exclusively through licensed travel and tourism service providers.
FAQs
Do I need a licence to rent out a chalet or apartment by the night in Saudi Arabia?▾
Yes. An individual needs a private hospitality unit licence from the Ministry of Tourism under the Private Hospitality Unit Regulation (Umm Al-Qura, 11 September 2026), and companies need a hospitality facility licence. Booking platforms have been barred from listing unlicensed units since 1 January 2025.
Who can obtain a private hospitality unit licence?▾
A natural person who is a Saudi national, or a non-Saudi who owns the unit, provided he submits an electronic title deed or proof of his right to use the unit for the whole licence term, the unit is in a residential, agricultural or mixed residential-commercial property, and the owners’ association bylaws and decisions in a jointly owned building do not bar or restrict daily letting (Articles 4 and 5 of the Private Hospitality Unit Regulation).
How much does a vacation rental licence cost and how long is it valid?▾
The fee schedule annexed to the Private Hospitality Unit Regulation sets SAR 1,100 for a licence application and SAR 500 for each extra visit after the first two, and the licence is valid for no more than one year.
Can I receive booking payments directly from the guest?▾
No. The regulation requires the licensee not to request or receive any amount from a tourist except through a travel and tourism service provider, and to take bookings only through such a provider.
Is vacation rental income subject to VAT?▾
Temporary accommodation is excluded from the residential-lease exemption, so 15% VAT applies when the landlord is registered. Registration is mandatory once taxable supplies exceed SAR 375,000.
