Commercial Rent Increases in Bahrain: When Can a Landlord Raise Company Rent?

In the commercial and investment sector in the Kingdom of Bahrain, leased real estate is considered vital headquarters for business survival. Hence, the Bahraini legislator intervened to create a fair balance ensuring the stability of operating costs for companies and factories for a longer period than the residential sector, while preserving the landlord investor's right to grow their returns after a reasonable period.

Disclaimer: This guide provides general legal information for educational purposes only and does not constitute legal advice. Step-up rents can be agreed upon in advance within the contract. Consult your legal advisor. Information last verified: March 2026.

The (4) Years Protection for the Commercial, Industrial, and Service Sector

While the residential tenant in Bahrain enjoys protection for two years from rent increases, the legislator granted the tenant for commercial, industrial, craft, or free profession purposes (like offices and shops) a longer protection period due to the massive cost of establishing the activity, through a strong and explicit text (Article 27):

The owner of a commercial property in Bahrain does not have the right to force the tenant (company or establishment) to impose an increase on the agreed rent, except according to the following controls and conditions:

1. Time Period (Four Years Protection): A full four (4) years must elapse from the date of signing the beginning of the original commercial lease contract or from the date of applying the last imposition of rent increase.
2. Maximum Ceiling for Increase (7%): If the four years elapse and the claim qualifies, the landlord does not have the right to demand an imaginary increase. The legal maximum limit for the commercial increase percentage is set at (7%) only of the stable monthly rent value at the time of sending the increase demand.
3. Maximum Limit for Exclusive Increase Times: To protect companies, the legislator restricted the property lessor that they cannot repeat this increase for more than (5) times throughout the tenant's journey in the CR, no matter how much the contract is renewed (meaning five 7% increases separated by a 4-year period).

Mandatory Notification of Increase to Companies

Similar to the residential sector, the (7%) percentage is not suddenly added to the rent. The commercial landlord must present a registered letter with acknowledgment of receipt (official notice) to the tenant company's address stating the application of their legal right to a percentage increase immediately upon the arrival of the fourth year's anniversary. The new rent applies directly.

Contractual Increase Agreements (The Permitted Exception)

Bahraini law opens the door for applying free will in commercial transactions:

• If the two parties agree in writing (the landlord of the tower, and the tenant bank) during the contract drafting phase on mechanisms to increase the rent, such as the contract being for 10 years and including an increase clause by a percentage (5% every two years as a Step-up Rent), then this pre-agreed regulation becomes the applicable and governing one for the relationship, and the condition of (the 4 years and 7% limit for Article 27) does not apply then. Therefore, commercial contracts are drafted with extreme flexibility for investment.

As an administrative procedure to ensure liquidity, Landager provides an automated tracking system for the dates of concluding all your commercial shop contracts. With the (Rent Escalation Tracker) feature, you will get an early warning and a plan for all your commercial properties that are legally about to complete the four (4) year period in Bahrain, so you can initiate without delay to notify your leased administrative offices and ensure the smooth flow of additional percentages without breaking the law.

Back to Bahrain Commercial Laws Overview.