Legislative Decree No. 2 of 2001 states that non-Bahrainis, whether natural or corporate persons, may own land in Bahrain. This law encompasses all non-Bahrainis, GCC national or otherwise. This was fully authorized in 2003. Land is also available for lease from the Government.

There are, however, restrictions concerning foreign ownership in Bahrain. There are specified zones that the Government designated for foreign ownership. The following are residential and commercial zones:

Ahmed Al-Fateh District Hoora District Bu Ghazal District Seef District

District or Northern Manama, including Diplomatic Area

Foreign ownership of residential properties is also available in: Durrat Al-Bahrain Amwaj Islands Dannat Hawar

Non-GCC expatriates can secure a permanent resident permit allowing them to own real estate property, but the permit is terminated in the event of sale of the property.

Recently, however, there is a bill approved by the Chamber of Deputies banning foreign nationals from acquiring land of more than 5,000 square meters (sq. m) in Bahrain, to control rising property prices. The Shura Council is yet to approve the bill.

It is advisable to hire the services of a lawyer during the whole process of buying.

Renting and Letting

The rental market is almost entirely foreign-driven, and has grown greatly since the massive increase in US army numbers, who live largely in Juffair.

More recently the Saudi oil boom has meant a substantial increase in new residents, who drive across the straits rather than live in Saudi. The World Trade Centre is another attraction. Finally, the construction boom itself is fuelling rental demand.

Yields are estimated by local realtors at well over 10%, given the present shortage of properties for rent and strong demand.
Initial rents can be freely determined, as can rent increases. Three months' rent are paid in advance before a tenant can move in.

Landlords must serve a 60-day notice for termination of tenancy. In the absence of notice, tenancy agreements are automatically renewed on a monthly basis. Rent and rent increases can be freely agreed.

There is no legal regulation of security deposits. Security deposits are not very common in Bahrain, but some landlords and agents require a deposit, usually equivalent to a month (or a month and a half) rent. The deposit is held by the landlord against unpaid bills and liabilities. The security deposit cannot be used as payment for rent.

Rent is usually paid monthly, quarterly, bi-annually or annually depending on the terms agreed at the start of the tenancy. The rent is payable in advance, customarily three months in advance, and always quoted in Bahraini dinars (BHD) monthly amount.

The tenancy period can either be either short term agreement (less than a year), or a long term (more than a year).

If a lease agreement is entered between the parties without specifying a term, the rent payment term governs the term of the lease.
In the case of a fixed term contract (a long term contract is more common), both tenant and landlord have the right to terminate the agreement by serving notice three months prior to the end of the lease period.

If a tenant continues to enjoy the property after the expiry of the term, without objection from the landlord, the agreement is considered officially renewed for an indefinite period, under article 511 of the Civil Code. But such a renewal does not take place if the landlord has served a three months eviction notice prior to expiry of the term, even if the tenant continues to occupy the property.

Either party is entitled to terminate the lease prior to expiry, if unforeseen events or circumstances make the performance of the agreement very onerous. But this is very difficult for either party to prove in practice. The party seeking termination must serve notice. Either party may file a court suit to resolve the matter.

The lease or tenancy agreement must include the name and address of the landlord and tenant, address of the rented property, term of tenancy, monthly rent, payment arrangements, and the responsibilities of the contracting parties during the tenancy.

The usual time period to obtain a final judgment is quite lengthy. There may be numerous appeals by either party, which will normally be heard by a Civil Court. Matters accepted as urgent can take considerably less time, and are heard before a Summary Court.

The following is what happens if the landlord files a suit against a tenant for non-payment of rent, and the tenant subsequently decides to make payment:

A registered notice letter is sent to the creditor (landlord in this case), stating the amount paid, and the address of the place where the payment was made.
The creditor, within three days of receiving the notice, has the right to reject the notice and thereby reject the payment. The reason why a creditor would want to reject the payment is to evict the tenant and to dash any possibility of a future relationship.

If the creditor, within 10 days of receiving the notice, does not reply, then it would have been deemed to be a rejection.

Refusal of payment entitles the debtor to deposit the money in the Court's Treasury, and request the lift of any orders, until a final judgment is made.

The prevailing legislation is the Civil Code, promulgated by the Legislative Decree No. (19) Year 2001, supplemented by Legislative Decree No. (9) Year 1970, and Legislative Decree No. (22) Year 1976.

The initial legislation on Land Law began in 1936 in the form of Amiri Ordinances.

When Bahrain gained greater geopolitical significance, the Amiri Ordinance of 1946 established the fundamental Landlord and Tenant Laws.

Although primitive in comparison to laws of the modern era, the legislation protected the rights of tenants, and initiated the concept exceptional laws applying to the precincts of Manama and Muharraq. This legislation continues to be implemented today. Subsequent legislation in 1953 expanded topics such as formalities of a lease agreement, exceptional circumstances for eviction, and rules on notices.


There have been few alterations in landlord and tenant law, in contrast to the dramatic recent changes in land ownership laws. Major change in the area of Landlord and Tenant law is unlikely.

Mortgages

Mortgage finance is now easily available from banks such as HSBC, Bank of Muscat, Bank of Bahrain and Kuwait (BBK), the Kuwait Finance House, etc. Most require an income earned in Bahrain, but Bank of Muscat will accept outside-sourced remittance income.

Taxes

There are no income taxes in Bahrain. There is no withholding tax, capital gains tax, gift or inheritance tax.

Land Tenure

Legislative Decree No. 40 of 1999 allows ownership of Bahraini land by Gulf Country Council national (Saudi Arabia, Oman, Kuwait, UAE and Qatar).

Legislative Decree No. 2 of 2001 states that non-Bahrainis, whether natural or corporate persons, may own land in Bahrain. This law encompasses all non-Bahrainis, GCC national or otherwise. This was fully authorized in 2003.

Land is also available for lease from the Government.

Living There

Bahrain is different from the other Gulf states, because it has little oil and has to earn its living in other ways. In regional terms it is relatively poor, but is experiencing very strong economic growth, with GDP growth above 5%.

Bahrain is the most democratic country in the region. In 2001, Bahrainis strongly backed proposals put by the emir - now the king - to turn the country into a constitutional monarchy with an elected parliament and an independent judiciary.

Elections were held in 2002 for the 40-member Council of Deputies, the first such poll in nearly 30 years. The new body includes a dozen Shia MPs. The country has been enjoying increasing freedom of expression even in the local context, and monitors report that the human rights situation has improved.

But the ruling family, the Al-Khalifas, still provide the prime minister, deputy prime minister, and ministers of foreign affairs, defense, oil and finance, in fact nearly half the cabinet members are related to each other. Political parties are banned, and Parliament's upper house is unelected.