Commercial Lease Laws in Kuwait: A Guide for Investors and Corporate Tenants
A comprehensive overview of leasing offices and commercial shops in Kuwait under Law No. 35 of 1978 and its specific commercial amendments.
Legal Disclaimer
This content is for general informational and educational purposes only. It does not constitute legal advice and should not be relied upon as such. Laws change frequently — always verify current regulations and consult a licensed attorney in your jurisdiction for advice specific to your situation. Landager is a property management platform, not a law firm.
The commercial and administrative real estate sector in Kuwait (commercial complexes, office towers in the Capital, and showrooms) is the primary pillar for businesses. The most significant legal surprise here is that the Kuwaiti legislator merged the provisions of commercial and residential leases within a single law (Decree Law No. 35 of 1978), unlike countries that separate them entirely. This means the same basic rules of statutory extension and the Rental Court apply, albeit with customary commercial exceptions.
Disclaimer: This guide provides general legal information for educational purposes only and does not constitute legal advice. Drafting corporate incorporation contracts and showrooms is subject to strict conditions at the Kuwait Municipality and MOCI. Consult a licensed attorney. Information last verified: March 2026.
Commercial Lease Laws in Kuwait at a Glance
| Commercial Topic | Basic Rule | Legal Reference |
|---|---|---|
| Statutory Extension of the Contract | The contract extends for the commercial tenant by force of law; the landlord cannot force them to leave merely because the term ended. | Law No. 35 of 1978 (General Provisions) |
| Commercial Rent Increase | The (5-year) rule for demanding 'ajrat al-mithl' applies, with the permissibility of establishing a sales bonus (Turnover) by prior agreement. | Article (11) |
| Key Money (Initial Payment) | Article 16 prohibited charging any 'key money' (or advance) exceeding the rent, but complexes circumvent this with 'establishment service fees'. | Article 16 |
| Change of Activity | Changing the company's commercial activity mentioned in the contract without the landlord's consent is a definitive cause for eviction. | Article 20 |
Leases Connected to Commercial Licenses
The most complex connection in Kuwait's commercial real estate market is linking the property to the (approval of the Ministry of Commerce, Municipality, and Fire Department).
- A commercial tenant cannot issue their commercial license, open a company file, or recruit workers without a documented commercial lease agreement from authentication offices or the court, matching the exact description of the commercial activity. If the company's headquarters is registered to an office, the landlord becomes restricted before government agencies and cannot rent it to others until the departing company's license is canceled.
To learn more about fundamental contractual requirements, visit Commercial Lease Requirements.
Commercial Security and Bank Guarantees
In major commercial centers or car showrooms, a one-month rent deposit is not deemed sufficient. Instead, a guarantee equivalent to three or six months is requested as a (Bank Guarantee), in addition to a strict checklist for handing over the showroom in a (Core & Shell) condition.
For more details, review the Commercial Security Deposits guide.
Demanding 'Ajrat Al-Mithl' and Rent Increases
Owners of commercial showrooms are subject to the same restriction as their residential counterparts: they do not have the right to raise the rent based on inflation until exactly (5) years have passed. However, there is a commercial negotiation known as Percentage Rent which is applied covertly as service fees in some large Mall projects in Kuwait.
Review the increase guide here: Commercial Rent Increases.
Commercial Eviction (The Material Branch)
Commercial eviction reasons (non-payment for 20 days, demolition) are covered by the same Article 20. But what's new in commercial: if the tenant subleases the commercial shop without permission, but by (selling the store as a trade name or material branch / selling the 'Jadak'), the Plenary Court may allow the new buyer to stay under the exact same contract because it transferred the ownership of the establishment and is not an ordinary sublease, provided they practice the exact same activity.
Read eviction details in: Commercial Eviction Process.
Compliance in Managing Office Towers
Controlling assets the size of administrative buildings (a clinic complex or a luxury office tower in Dasman or Sharq) requires continuous monitoring of license expiration dates and timely payment of cheques to prevent the 20-day grace period from running against the commercial tenant. The Landager system is the optimal electronic solution for landlords in Kuwait to categorize residential and commercial contract classes and automate administrative and financial claims.
Explore the details for every commercial sector in Kuwait:
Sources & Official References
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