Kuwait Commercial Rent Increases (Ajrat Al-Mithl) for Landlords

In the commercial sector, rent increases are a critical factor for real estate investment returns. Governed by Decree Law No. 35 of 1978 (Effective July 30, 1978) and its recent amendments under Decree Law No. 95 of 2024, Kuwaiti rental law establishes strict protections for commercial tenants. The five (5) year rule remains the mandatory reference point for any rent adjustments, and any contractual clause allowing an increase before this period is null and void as a matter of public policy.

Legal DisclaimerThis guide provides general legal information. Lease laws can change. Always consult a licensed notary or lawyer in this region.

The 5-Year Protection for Showrooms and Offices (Ajrat Al-Mithl)

According to Article (11), "The lessor may not increase the rent, nor may the lessee demand its reduction, before the lapse of five full years from the date of the commencement of the lease or from the date of the last modification made to the agreed rent."

1. Immediate Nullity: If a mall owner commits to leasing a showroom to a car dealership with a 10-year contract at a fixed price, and adds a clause stating "rent will increase by 10% every two years," this clause is absolutely null and void because it violates the minimum 5-year period legally established in Kuwait.
2. Judicial Demand: Upon the expiration of the five years, if the company and landlord do not agree on a new marginal amount, either party has the right to file a lawsuit requesting the estimation of 'Ajrat Al-Mithl' (Fair Market Rent). The Rental Court determines this value based on expert assessment of similar properties in the same area or building.
3. Enforceable Leases (2024 Amendment): Under Decree Law No. 95 of 2024 (Article 11 bis), a written lease contract that is notarized and appended with an 'executive formula' serves as an enforceable executive document. This allows landlords to collect agreed-upon rent or evict for non-payment without a preliminary court judgment, provided the tenant is formally notified.

Can Pre-Agreed Increases be Built into a Commercial Contract Without Violation?

Yes, there are strategic solutions used in major commercial contracts in Kuwait:

The Step-up Rent Strategy (Escalating Rent for 5 Years)

Instead of waiting for the 5 years, both parties can agree in advance in an extended commercial lease (for more than 5 years) to allocate an escalating rent from the very beginning of signing the contract.

• Legal Example: It is agreed in the contract that the rent for the first five years will be (1000) Dinars, then from the sixth year the rent becomes (1200) Dinars... and so on. Here, the increase is valid because it initially adheres to completing the 5-year cycle before application, and the tenant has agreed to it in advance.

The Turnover Rent System (For Complexes and Shopping Centers)

Massive Malls and some global brands in Kuwait adopt an innovative strategy to cover market fluctuations, where the commercial rent consists of two parts:

1. Base Rent: A fixed monthly fee.
2. Percentage of Sales (Percentage / Turnover Rent): The landlord takes a percentage of revenues if sales exceed a certain threshold.

Legality in Kuwait: Decree Law No. 95 of 2024 explicitly exempts 'Mudaraba' (Profit-Sharing) leases and contracts with unconventional financial obligations (such as turnover-based rent in malls) from the standard protections of the Lease Law. This allows these commercial structures to operate outside the 5-year rent increase restriction, as they are considered participatory revenues rather than fixed rent.

Your ability to organize these statements and increases in your institution's contracts requires a tracking tool. Because the Landager system supports the inclusion of escalating rent clauses and automated demand notifications, you will never forget the due date for demanding an increase from corporate tenants after the five years have elapsed.

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