Commercial Lease Laws in Kuwait: A Guide for Investors and Corporate Tenants

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, as amended by Decree Law No. 95 of 2024), 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, with significant new provisions for enforcement.

Avis de non-responsabilité légaleCe guide fournit des informations juridiques générales. Les lois sur les baux peuvent changer. Consultez toujours un notaire ou un avocat agréé dans cette région.

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 'primary 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 RequirementsAperçu non disponible.

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 DepositsAperçu non disponible 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 IncreasesAperçu non disponible.

Commercial Eviction (Streamlined Enforcement)

Recent amendments under Decree Law No. 95 of 2024 have significantly streamlined the eviction process for commercial properties. Now, notarized lease contracts can be treated as "executive documents," allowing landlords to collect overdue rent or initiate evictions through the Execution Department directly, often bypassing the need for a preliminary court judgment. This means traditional commercial eviction reasons (such as non-payment for 20 days or demolition, covered by Article 20) can be enforced much more rapidly.

However, specific commercial nuances persist. For instance, if a tenant subleases a commercial shop without permission, but through the legal mechanism of (selling the store as a trade name or material branch / selling the 'Jadak'), the Plenary Court may still permit the new buyer to remain under the existing contract if it involved the transfer of establishment ownership and the new tenant practices the exact same activity.

Read more about the updated eviction process and details in: Commercial Eviction ProcessAperçu non disponible.

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. With the new "executive document" status of notarized lease contracts under Decree Law No. 95 of 2024, landlords can now act swiftly to enforce payment obligations, making it even more critical to prevent grace periods (like the traditional 20-day period for commercial tenants) from expiring. 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, crucial for navigating these faster enforcement pathways.

Explore the details for every commercial sector in Kuwait:

• Commercial Security DepositsAperçu non disponible
• Commercial Eviction ProcessAperçu non disponible
• Commercial Required DisclosuresAperçu non disponible
• Commercial Rent IncreasesAperçu non disponible
• Commercial Lease RequirementsAperçu non disponible
• Commercial Maintenance ObligationsAperçu non disponible
• Commercial Late FeesAperçu non disponible

How Landager Helps

Landager tracks lease terms, commercial overview deadlines, and payment schedules - making it easy to stay compliant with Kuwait regulations.

Back to Kuwait Landlord-Tenant Laws OverviewAperçu non disponible.