Reuters – Saudi Arabian Monetary Agency (SAMA) has granted a license to its national home finance company, Bidaya and it will launch with SR900 million ($239.94 million) in capital, the firm announced.
SAMA’s decision joins efforts to boost home ownership in the Kingdom, where a shortage of affordable housing has become an economic and social issue for young citizens.
“We’re pleased to get the green light from SAMA to work in the local market as the first Saudi company licensed since the new sector regime was issued,” Bidaya Chairman Khaled bin Mohammed Al-Aboodi said, referring to mortgage regulations adopted last November.
In development since 2010, Bidaya is a venture between the finance ministry’s Public Investment Fund and the Jeddah-based Islamic Corporation for the Development of the Private Sector (ICD), a unit of the Islamic Development Bank.
The company aims to make financing more readily available in a Kingdom where home ownership levels lag behind the global average of 70 percent.
Government data shows home ownership among roughly 21 million Saudi citizens at 60 percent.
But the International Monetary Fund has estimated that excluding people living in “traditional” housing, the rate is 36 percent.
In addition to addressing the financing side, the Saudi government has also sought to increase housing supply.
Last month, the Cabinet imposed a 2.5 percent tax on unused urban land to incentivize owners to develop empty plots.