Decree-law issued on housing finance for eligible beneficiaries of housing care

Yesterday, Decree-Law No. 114 of 2026 concerning housing finance for beneficiaries of housing care was issued, with the aim of providing housing care in a timely manner and removing the major financial obstacles hindering this objective.

According to the explanatory memorandum accompanying the decree-law, which comprises 15 articles, the law aims to ensure the sustained provision of dignified housing for Kuwaiti citizens in the near future.

Article Two of the decree-law defined the scope of its application and specified that it applies for the purpose of purchasing a residential unit from a real estate developer in accordance with the provisions of Law No. 118 of 2023 concerning the establishment of companies for the creation and economic development of cities or residential areas, as amended by Decree-Law No. 89 of 2025, or for building on the government plot allocated by the Public Authority for Housing Welfare, in accordance with the conditions and regulations set by the Authority for housing projects.

Article Three of the aforementioned decree-law stipulated the conditions for a beneficiary’s eligibility for subsidized housing finance, including meeting the general conditions set forth in the mortgage loan regulations issued by the Kuwait Credit Bank for the purposes of purchase or construction, and not having previously received housing care from the State, whether in the form of government plots allocated by the Public Authority for Housing Welfare with a title deed issued to the individual, or by having received any loans granted by the Kuwait Credit Bank, regardless of their value or purpose.

Article Four of the decree-law outlined the specific provisions regarding housing finance, whether subsidized or non-subsidized, and the repayment mechanism. It allowed for combining both types of financing in accordance with the controls and procedures established by the Central Bank of Kuwait.

The same article clarified that the beneficiary is responsible for repaying the principal of both subsidized and non-subsidized housing finance, as well as the interest or returns accruing on non-subsidized financing, in accordance with the terms of the financing contract and the regulations of the Central Bank of Kuwait, while noting that the State bears the cost of interest or returns on subsidized housing finance in accordance with the provisions of this decree-law.

Article Five of the aforementioned decree-law determined that all housing finance must be repaid in equal monthly installments, with the repayment period not exceeding 25 years from the date the housing finance begins to be disbursed by the financing institution, in accordance with the instructions and regulations set by the Central Bank of Kuwait.

Article Six of this decree-law referred the procedures for disbursing housing finance for purchasing a residential unit from a real estate developer to the provisions of Law No. 118 of 2023 concerning the establishment of companies for the creation and economic development of cities or residential areas. It also specified that housing finance for the purpose of construction on the government plot allocated by the Authority shall be disbursed in stages and in accordance with the rules established by the bank.

Article Seven of the decree-law obligated financing institutions to notify the beneficiary in case of failure to repay the housing finance provided by those institutions, in accordance with the terms of the housing finance contract. In such cases, it permitted these institutions either to reschedule the housing finance for a period not exceeding five years, in accordance with the instructions of the Central Bank of Kuwait, with the beneficiary bearing the interest or returns resulting from the rescheduling period for both subsidized and non-subsidized housing finance, or to take legal action against the beneficiary.

Article Eight obliged financing providers to register mortgage financing cases and submit related documentation to the bank, while referring to the executive regulations to determine procedures for mortgage financing, rescheduling, early repayment mechanisms, grace periods, default cases and their procedures, and borrower notification.

Article Nine of the aforementioned decree-law, within the scope of the provisions of this decree-law and its executive regulations, obliged the Ministry of Finance to pay the interest or returns accruing on subsidized mortgage financing to the Kuwait Credit Bank from the General Reserve Account, which would then settle these amounts with the subsidized financing providers in accordance with the conditions and procedures specified in the executive regulations.

Article Ten stipulated that the bank, on behalf of the state, is committed to settling the remaining balance of subsidized mortgage financing with financing providers in the event of a borrower’s default.

Article Eleven clarified that the bank obtains the mortgage in consideration for its commitment, on behalf of the state, to financing providers to settle the remaining balance of subsidized mortgage financing in case of borrower default, and that the mortgage is only established through an official mortgage deed.

The same article emphasized that the property must be precisely and specifically identified in the mortgage deed; otherwise, the mortgage is void. The registration of the mortgage securing the mortgage financing shall not be removed throughout the contract period and until the full settlement of the debt.

It further emphasized that the borrower is not permitted to dispose of the mortgaged property through sale, gift, or other dispositions, or to establish any real right over it, except after obtaining prior approval from the bank and the mortgage financing provider, provided that the transferee is among those eligible for housing support, has not previously obtained mortgage financing, and accepts the transferee’s assumption of the obligations arising from the mortgage financing contract.

The same article referred to the executive regulations to determine the mechanism and procedures for registering, managing, and disposing of the mortgage.

Article Twelve of the decree granted the Kuwait Credit Bank or any entity designated by the competent minister the right to purchase all or part of the mortgage financing provided to beneficiaries by financing providers, securitize it, tokenize it, sell it to investors, and repurchase it as one of the investment instruments that enhance the economic environment, in accordance with the procedures stipulated in the executive regulations and the regulations of the Central Bank of Kuwait and the Capital Markets Authority.

Article Thirteen obliged the Central Bank of Kuwait to issue specific rules and regulations regarding the granting of mortgage financing and to determine the interest or return rates applicable to non-subsidized financing.

Article Fourteen of the aforementioned decree-law emphasized the necessity of issuing the executive regulations for the draft decree-law based on a proposal from the competent minister within six months from the date of its publication in the Official Gazette.

Article Fifteen specified that the provisions of the present draft decree-law shall apply to beneficiaries from the date of publication of the executive regulations in the Official Gazette.