1. 29july 2015 AH28 AH july 2015
new Lease Law, Law No.27 of
2014 (“Lease Law”) came into
effect on February 7th, 2015,
as part of a new wave
of development in the
real estate market.
The previous law, the Rents
Act No. 42 of 1946, as amended, was, at times,
difficult to enforce, as it divided the Kingdom into
two municipalities only, Manama and Muharraq,
and applied only to certain premises with
specific types and purposes. Furthermore, the
imbalance of rights afforded to both the tenants
and the landlords under the old law was one of
the crucial issues that was fortunately
addressed by the Lease Law.
In comparison, Law No.27 of 2014
applies to new and existing residential,
industrial, commercial, professional
leases of properties in Bahrain; however,
the following leases are exempt from the
provisions of the Lease Law:
Industrial Tenancies which are subject
to Law No. 28 of 1999 in relation to the
Establishment and Organization
of Industrial Zones;
Leases of agricultural land;
Properties leased for the purposes of
hospitality and tourism;
Leases of furnished apartments which do
not exceed a period of 1 month;
Leases of units which are used for work
circumstances; and
Properties subject to Musataha
arrangements for the purposes of development.
The Lease Law annuls previous laws issued
under proclamations 29 of July 9th 1944, 42 of
August 25th 1946, 42 of 1955 as well as law
decrees 9 of 1970 and 8 of 1948.
As a result, the comprehensiveness of the
Lease Law and its applicability to exclusive types
of properties in all areas of Bahrain, achieves the
aim of providing clarity and consistency to an
extremely important sector of the region’s legal
system, by codifying the previous lease laws into
one single piece of legislation.
Prominent Features of the
Law No.27 for 2014
The documentation and registration of the
existing and new leases has been addressed in
the Lease Law. Under the Lease Law, all existing
and new leases must be documented and
registered by the landlord, with the “Municipal
Contact: Qays H. Zu’bi, Senior Partner Tel + 973 17 538 600 / email: qzubi@zubipartners.com / website: www.zubipartners.com
Comparison Between
the Old and the New
Rasha Belbaisi: Legal
Consultant/Certified
Arbitrator, Zu’bi &
Partners Attorneys & Legal
Consultants
Noor Al Taraif: Associate,
Zu’bi & Partners Attorneys
& Legal Consultants
Property Law
Lease Registration Office”, which is the
entity responsible for the registration and
management of leases, upon payment of a
fee ranging from BHD (1) to (5) for residential
leases and BHD (5) to (10) for other types of
leases within 6 months from the effective date
of the new Lease Law.
Article 35A of the Lease Law prevents a
landlord from requesting a tenant to vacate
the lease property within the first 3 years
of the term of residential leases, or within
the first 7 years of the term of other leases
(industrial, professional, or commercial),
unless the parties agree otherwise.
The restrictions imposed on the landlord’s
rights to increase rent were among the most
significant impacts of the Lease Law. Unless
the parties to a lease agreement have agreed
otherwise in writing, the Lease Law restricts
landlords from increasing the agreed rent for
a consistent period of (2) years from the date
of the lease or the date of the last increase
of rent. The Lease Law limits the level of the
rent increase to 5 per cent for residential
leases and 7 per cent for all other types of
leases. Under the Lease Law, the landlord is
not entitled to increase the rent more than (5)
times during the term of the lease.
Furthermore, the Lease Law stipulates that
rent should be paid within the first week of
the agreed due date. If the lease agreement
does not specify a due date, the rent shall be
due on the first day of each month during the
term of the lease agreement.
Furthermore, the Lease Law permits the
landlord to receive a deposit not exceeding
3 months’ rent which should be refunded to
the tenant on the expiry of the lease term or
any time sooner by termination or handover.
The deposit payment will be subject to
deductions applied by the landlord for any
breaches or obligations that remain at the
time of termination of lease on the tenant.
One of the most prominent outcomes
of the new Lease Law is the introduction of
the “Rent Disputes Committee”. Under the
new Lease Law, all disputes related to any
provision of the new Lease Law will now be
resolved out of Court in a timely manner by
the “Rent Disputes Committee”. It is hoped
that this new approach will result in an
overall reduction of the burden set on
national courts.
The passing of the Lease Law
is considered to be a long awaited
development in the regulation of the property
sector and is expected to resolve many of the
issues currently faced by contracting parties
and facilitate the settlement
of related disputes.
LEASE LAW