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New Lease Law

Bahrain has issued Law No. 27 of 2014 in relation to the law of property leases in Bahrain (Lease Law).


The Lease Law applies to new and existing residential, industrial, commercial, professional or other leases of properties in Bahrain (Lease). The following leases are exempt from the provisions of the Lease Law:

  • Industrial Tenancies which are subject to Law No. 28 of 1999 in relation to the Establishment and Organization of Industrial Zones;
  • Leases of agricultural land;
  • Properties leased for the purposes of hospitality and tourism;
  • Leases of furnished apartments which do not exceed a period of 1 month;
  • Leases of units which are used for work circumstances; and
  • Properties subject to Musataha arrangements for the purposes of development.

The Lease Law sets out that all new Leases must be in writing and registered within 1 month at the Office of Lease Registration which will be situated at each of the 5 Municipalities in Bahrain (OLR).

All existing tenancies must be documented in a formal lease and registered within 6 months from the date the Lease Law comes into effect. In addition, the Lease Law provides that all tenancies pursuant to Law No. 9 of 1970, which relates to tenants occupying a property when the original lease has expired and where the tenant has subsequently renewed, will terminate 3 years from the date the Lease Law comes into effect.

The Ministry will establish the OLR which will be the entity responsible for the registration and management of Leases. A Ministerial Order (Order) will be issued which sets out full details of the responsibilities and activities of the OLR as well as the process of registration.

The Order will also set out a more detailed fee schedule in relation to the registration of Leases and any amendments to the Leases. However, the Lease Law sets out the following registration fees which will be levied on the landlord of a Lease or deducted from the rent paid by the tenant of that Lease:


Statutory Obligations 

The Lease Law sets out a number of statutory obligations on the landlord and tenant in respect of Lease. The main obligations include:

Landlord’s Obligations

  • The landlord must ensure that the property is handed over to the tenant in a state and condition which is suitable for the purposes of the Lease.
  • The landlord is require to make essential / necessary repairs to the property. Should the landlord fail to make these repairs, a tenant may, subject to notifying the landlord undertake the repairs and seek compensation from the landlord. 
  • If the Lease includes the size of the property, but the actual size of the property does not correspond to that set out in the Lease then the tenant may be entitled to terminate the Lease in certain circumstances.
  • The landlord must handover the leased property immediately following the execution of the Lease or at an agreed date.
  • The landlord is entitled to receive a deposit which may not exceed an amount equivalent to 3 months rent and is required to refund this deposit to the tenant, subject to any deductions, on the expiry of the term of the Lease or sooner termination and handover.

Tenant’s Obligations

  • The tenant must pay rent within 1 week from the date the rent is due under the Lease. If the Lease does not specify dates, then the rent will be deemed to be due on the first day of each month of the term.
  • The tenant must only occupy the property for the agreed use.
  • The tenant is required to keep the property in a good condition and is not permitted to make any alterations without the written consent of the landlord unless the proposed alteration does not materially affect the property.
  • The tenant must keep any additions or improvements made to the property on the expiry of the term unless agreed otherwise.
  • The tenant is responsible for making minor repairs to the property.
  • The tenant is obliged to bear the costs of utilities such as water, electricity and telephone, unless agreed otherwise.
  • The tenant must return the property in the state it was at the start of the Lease and ensure that all payments in respect of the property have been made.

Unless the parties have agreed otherwise in writing, the Lease Law restricts a landlord from increasing the agreed rent until the earlier of 2 years from date of the Lease or the date of the last rent increase. The Lease Law prescribes the level of the increase as 5% for residential Leases and 7% for all other Leases and for the rent to be increased no more than 5 times during the term of the lease.

A landlord must provide a tenant with written notice of the rent increase not less than 3 months from the expiry of the two year period referred to above.

A tenant may not underlet a property without the prior written consent of the landlord. Importantly, any permitted underlettings will not be deemed effective until they have been registered. A permitted underletting must not exceed the term of the Lease and can provide a rent equivalent to the higher of the rent in the Lease or a rent agreed by the tenant and undertenant.

In the event that a tenant assigns its rights in the Lease to a third party, all rights and obligations under the Lease will be transferred to the third party until the expiry of the term.

Transfer of Ownership
Where a property subject to a Lease is transferred to a new owner (New Owner), then all rights and obligations under the Lease are transferred to the New Owner on the existing terms. As such, the New Owner may not increase the agreed rent or terminate the Lease unless it is pursuant to the provisions of the Lease Law.

The New Owner is required to provide the tenant and the OLR with written notice of the change of ownership within 30 days from the date of the property has been registered at the Survey and Land Registration Bureau by the New Owner.

The New Owner cannot request a tenant to pay rents which were due to the previous owner prior to the transfer of ownership unless it is proven that these rents were not paid.

Renewals and Termination of the Lease
The Lease will terminate on the date of expiry of the term. However, if a tenant remains in the property following the expiry of the term with the knowledge and non-objection of the landlord, then the Lease will be deemed to be extended to a period equivalent to the term and on the same terms.

If the tenant intends to terminate the Lease, then it must serve written notice to the landlord not less than 3 months prior to the expiry of the term. The Lease will not be deemed to be extended or renewed if the tenant remains in occupation of the property after it has served such notice and the term expires.

Without prejudice to the termination rights in the paragraph below, a landlord cannot request a tenant to vacate the property within the first 3 years of the term for residential leases or the first 7 years of the term for other leases, however, the parties are to agree otherwise.

The Lease Law provides the right to tenants to renew Leases which are less than the periods stated in the preceding paragraph by way of written notice to the landlord which is not less than 3 months from the expiry of the term.

Landlord’s right to terminate the Lease

The Law sets out the circumstances in which a landlord may terminate the Lease. These include the following:

  • Failure of the tenant to pay rent on the required dates or two consecutive months by an order of the Committee (see below for more details).
  • If the tenant grants an underlease of the property without the landlord’s written consent.
  • Where the tenant uses or permits the use of the property contrary to:
    (a) The permitted use in the Lease; or
    (b) Against public order or public decency; or
    (c) In a manner which is detrimental to the landlord’s financial benefit.
  • In the event that the property becomes unfit and unsafe for occupation or where an order by the relevant Municipality has been issued for the demolition of the property.
  • If a period of 25 years has passed from the date the property was built or where the area the property is situated in has been subject to rezoning then the landlord is provided the right to demolish the property and is required to complete the demolition within 1 year from the date the Lease is terminated. If works have not commenced within this period, then the Tenant may request to return to the property or receive compensation which does not exceed the agreed rent in the Lease.
  • If the landlord wishes to utilise the property for its personal residential use or the use of any of its relatives to the first degree provided that there is a written agreement with the tenant to this effect and that the landlord has provided the tenant with not less than 6 months notice from the date it intends to terminate the Lease. The landlord or its relatives are required to take actual occupation of the property within 1 year and if they fail to do so then the Tenant may request to return to the property or receive compensation in an amount determined by the Committee which will not exceed an amount equivalent to rent for the remainder of the term of the Lease.
  • If the tenant has not been occupying the property for a period not less than one year.

The Committee in certain circumstances may provide tenants with a grace period to implement its order for a period that does not exceed 3 months for residential Leases or 6 months for other Leases.

The Ministry will establish a committee for the resolution of disputes in relation to leases governed by the New Law (Committee). Leases which have not been registered pursuant to the Lease Law will not fall under the Committee’s remit.

The New Law enshrines the rights and obligations of landlords and tenants and introduces some important new concepts. It is yet further evidence that Bahrain is continuing to implement new legislation which will enhance the real estate sector. Together with legislation that has already been enacted as well as other legislation that we envisage coming into force over the short to mid-term, Bahrain is taking significant steps to help support one of the most important parts of its economy.

For further information, please contact Unkar Chanian, Senior Associate on +973 17 133202 or unkar.chanian@crsblaw.com, or Reem Al Mahroos.