WELCOME TO CHARLES RUSSELL SPEECHLYS.
We would like to place strictly necessary cookies and performance cookies on your computer to improve our website service.
Otherwise, we'll assume you are OK to continue. Please close this message
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:
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:
The Lease Law sets out a number of statutory obligations on the landlord and tenant in respect of Lease. The main obligations include:
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:
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 firstname.lastname@example.org, or Reem Al Mahroos.