Commercial Lease Laws in Kuwait: A Guide for Investors and Corporate Tenants
A 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.Information last verified: May 2026.
The commercial and administrative real estate sector in Kuwait (commercial complexes, office towers in the Capital, and showrooms) is primarily governed by Decree Law No. 35 of 1978 (effective 16 August 1978), which remains the primary pillar for businesses. The most significant legal aspect here is that the Kuwaiti legislator merged the framework of commercial and residential leases within a single law, unlike countries that separate them entirely. However, commercial leases are primarily governed by the principle of contractual freedom and the agreement of the parties, rather than the automatic statutory extension protections afforded to residential tenants.
Legal DisclaimerThis guide provides general legal information. Lease laws can change. Always consult a licensed notary or lawyer in this region.
Commercial Lease Laws in Kuwait at a Glance
| Commercial Topic
| Basic Rule | Legal Reference | |---|---|---| | Statutory Extension of the Contract | Commercial leases are generally subject to the terms of the agreement; they do not enjoy the automatic statutory extension protections of residential leases. | 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 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.
Notarized lease contracts, under Decree Law No. 95 of 2024 and the earlier Law No. 15 of 2020, can be treated as "executive documents" (Article 11 bis). This allows 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 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. With the "executive document" status of notarized lease contracts, 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:
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 Overview.
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