The introduction of a land tax, first announced by the cabinet in November, marks a big step for the world’s top oil exporting country in addressing a housing shortage frequently griped about by young Saudis

Saudi’s housing minister Majed al-Hogail said Wednesday the government would announce the final regulations on an annual tax on undeveloped urban land in two weeks.

“Land fees are now complete and have been studied by all concerned entities and within the next two weeks we will announce it,” Majed al-Hogail said at a press conference.

The ministry has said the new tax would be equivalent to 2.5% of the value of the land held by individuals or non-government entities.

The introduction of a land tax, first announced by the cabinet in November, marks a big step for the world’s top oil exporting country in addressing a housing shortage frequently griped about by young Saudis.

Analysts estimate that 40 to 50% of the land inside major cities remains vacant, much of it owned by wealthy individuals or companies that have tended to hold or trade it for speculative profits rather than developing it for housing.

The minister also announced that Saudi planned to issue an Islamic bond, or sukuk, for its Real Estate Development Fund by the end of 2017/2018.

“The sukuk program is specialized for the real estate development fund,” Majed al-Hogail added.

The fund is the largest financer for the Saudi real estate sector and has a portfolio of around 190 billion Saudi riyals ($50.67 billion), the minister said.

“We believe we can get cash flow from issuing sukuk for these loans and getting money to deal with the fund’s waiting list in the fastest time possible,” he said.

Saudi Arabia has proposed measures aimed at boosting its undersupplied housing market as part of the country’s ambitious National Transformation Plan.

The Saudi government published a five-year National Transformation Plan (NTP) on Monday, part of a wider set of reforms launched in April as “Vision 2030”.

The plan targets increasing the percentage of Saudi families that own homes to 52% by 2020. It aims to reduce the cost of housing from what averages out as roughly 10 times gross salaries to just five times by the year 2020.

It will also include a target to raise the contribution of the property sector to the kingdom’s GDP from 5% to 10% and push the contribution of property financing to non-oil GDP from 8% to 15% by 2020.

An estimated 400,000 affordable homes would be required as part of the plan to meet rising needs.

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