Quick Summary
- Saudi Labour Law does not mandate a specific housing allowance amount — it is contract-based
- Housing allowance is typically 25–30% of basic salary as an industry standard
- Two types: cash allowance (you find your own housing) or employer-provided accommodation
- If your contract states a housing allowance it is a contractual right — withholding it is a violation
- Housing allowance is not included in EOSB calculation — only basic salary is used
- Always get the housing benefit clearly stated in your contract before signing
Is Housing Allowance Mandatory in Saudi Arabia?
Saudi Labour Law does not set a mandatory housing allowance amount. However it does require that the employment contract clearly specifies all salary components and benefits. In practice, housing allowance has become a near-universal component of expatriate employment packages in Saudi Arabia — particularly for professional and managerial roles.
The key principle is this: whatever housing benefit is stated in your contract is a legally enforceable right. Employers cannot unilaterally change or withhold a contractually agreed housing allowance.
Two Types of Housing Benefit
| Type | How It Works | Pros | Cons |
|---|---|---|---|
| Cash Housing Allowance | Monthly cash amount paid to you — you find your own accommodation | Full flexibility, keep savings if you spend less | You manage the rental process yourself |
| Employer-Provided Accommodation | Employer arranges and pays for housing directly | Zero housing hassle, consistent quality | No flexibility, tied to employer-chosen location and type |
What Is a Typical Housing Allowance Amount?
While there is no legal minimum, market standards in Saudi Arabia give a clear picture of typical ranges:
- Industry standard: 25–30% of basic salary per month. A basic salary of SAR 8,000 would typically attract a housing allowance of SAR 2,000–2,400/month (SAR 24,000–28,800/year).
- Lower salary roles: Some lower-salary positions offer fixed housing allowances of SAR 1,000–2,000/month regardless of basic salary percentage.
- Senior and Western expat packages: Fully furnished premium accommodation is often provided directly rather than a cash allowance — particularly for packages in the SAR 30,000+/month range.
- Compound accommodation: Common for Western expats. Employer leases units in a residential compound and allocates them to employees. Quality and size depends on employment grade.
Housing Allowance vs Actual Rent — The Gap Problem
In many cases the housing allowance offered in a contract does not fully cover actual market rents in the expat-preferred areas of major Saudi cities. This creates a common financial trap:
- Contract states SAR 2,000/month housing allowance (SAR 24,000/year)
- The expat wants to live in Al Olaya or Al Nakheel where 2-bed apartments cost SAR 50,000–70,000/year
- The gap of SAR 26,000–46,000/year comes out of the expat's own salary — significantly impacting savings
The solution is to either negotiate a higher housing allowance before signing or adjust your area expectations to match the allowance. Never mentally account for topping up housing from salary as a sustainable plan — calculate the total package impact honestly.
Housing Allowance and EOSB — An Important Distinction
Many expats mistakenly believe their full salary including housing allowance is used to calculate their end-of-service benefit (EOSB / gratuity). This is incorrect:
- EOSB is calculated on basic salary only — housing allowance, transport allowance and other allowances are excluded
- A contract with SAR 6,000 basic + SAR 3,000 housing + SAR 1,000 transport = SAR 10,000 total salary pays EOSB based on SAR 6,000 — not SAR 10,000
- This is why negotiating a higher basic salary rather than higher allowances produces a better long-term financial outcome — it increases both your monthly income and your eventual EOSB
What If Your Employer Withholds the Housing Allowance?
If your contract states a housing allowance and your employer is not paying it or has unilaterally reduced it:
- Send HR a formal written email referencing the specific clause in your contract that states the housing allowance amount and noting that payment is missing or reduced
- If no response within one week, file an HRSD complaint at hrsd.gov.sa — withholding contracted salary components is treated the same as withholding salary under Saudi Labour Law
- Include your contract, pay slips showing the discrepancy and your written HR correspondence as evidence in the complaint
Frequently Asked Questions
My employer provides accommodation directly. Can they reduce the quality or move me to a worse unit?
If your contract specifies the type or standard of accommodation provided, unilaterally reducing quality is a contract violation. If the contract is vague about accommodation standard, the employer has more flexibility. This is why getting specific accommodation details in writing before joining is important. If moved to significantly inferior accommodation without consent, this is grounds for an HRSD complaint about material contract change.
Can I keep the surplus if my rent is less than my housing allowance?
Yes — if your employer pays you a cash housing allowance and you find cheaper accommodation, the difference is yours to keep. This is one of the financial advantages of a cash allowance over employer-provided accommodation. Some expats in lower cost areas save SAR 500–1,500/month this way by living modestly relative to their housing allowance.
Is housing allowance subject to the remittance levy when I send it abroad?
The remittance levy applies to international transfers by non-Saudi residents — it does not distinguish between salary components. Your entire net income (salary plus all allowances) is subject to the same levy rules when transferred internationally. Factor this into your remittance planning and use platforms like Wise or Al Rajhi to minimise transfer costs.
Housing Allowance Dispute or Negotiation Help?
Whether your employer is withholding your housing allowance or you want help negotiating a better package — book a consultation for clear guidance on your rights and strategy.