Decree-law issued on housing finance for eligible recipients 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 main material obstacles hindering it. According to the explanatory memorandum of the decree-law, which comprises 15 articles, it was enacted to ensure the sustainable provision of dignified housing for the Kuwaiti citizen 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 the government plot allocated by the Public Authority for Housing Welfare, in accordance with the conditions and controls 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 prescribed in the mortgage loans 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 for which a title deed was issued, or by obtaining any loans granted by the Kuwait Credit Bank, regardless of their value or purpose.

Article Four of the decree-law outlined the special provisions regarding housing finance, whether subsidized or non-subsidized, and the repayment mechanism. It allowed for combining both types of finance 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 the non-subsidized finance, in accordance with the terms of the finance contract and the Central Bank of Kuwait’s regulations, 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 shall be repaid in equal monthly installments, with the repayment period not exceeding 25 years from the date of the commencement of disbursement of the housing finance by the granting institution, in accordance with the instructions and controls 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 the granting 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, provided that the beneficiary bears the repayment of interest or returns resulting from the rescheduling period, whether the finance is subsidized or non-subsidized, or to take legal action against the beneficiary.

Article Eight obligated the granting institutions to register housing finance cases and submit related documents to the bank, while referring to the executive regulations to determine the procedures for housing finance, its rescheduling, early repayment mechanisms, grace periods, default cases and their procedures, and notification

The beneficiary. Article 9 of the aforementioned Decree-Law, within the scope of its provisions and its Executive Regulation, obligated the Ministry of Finance to pay the interest or returns accruing on subsidized housing finance to the Kuwait Credit Bank from the General Reserve Account, which would then settle payments to the financing providers in accordance with the conditions and procedures specified in the Executive Regulation.

Article 10 stipulated that the Bank, on behalf of the State, is committed to the financing providers to settle the remaining balance of the subsidized housing finance in the event that the beneficiary defaults on repayment.

Article 11 clarified that the Bank obtains the mortgage in consideration for its commitment, on behalf of the State, to the financing providers to settle the remaining balance of the subsidized housing finance in the event of the beneficiary’s default. It further specified 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 housing finance shall not be cancelled throughout the duration of the contract and until the full settlement of the debt.

It also affirmed that the beneficiary is not permitted to dispose of the mortgaged property through sale, gift, or other forms of disposition, or to establish any real right over it, except after obtaining prior approval from the Bank and the housing finance provider. The transferee must be eligible for housing care and must not have previously received housing finance. Furthermore, the transferee must accept to assume the beneficiary’s obligations under the housing finance contract.

The same article referred to the Executive Regulation to determine the mechanisms and procedures for registering, managing, and disposing of the mortgage.

Article 12 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 housing finance provided to beneficiaries by the financing providers, securitize it, tokenize it, and sell it to investors, and to repurchase it as one of the investment instruments that enhance the economic environment, in accordance with the procedures stipulated in the Executive Regulation and the regulations of the Central Bank of Kuwait and the Capital Markets Authority.

Article 13 obligated the Central Bank of Kuwait to issue the rules and regulations governing the provision of housing finance and to determine the interest or returns applicable to non-subsidized finance.

Article 14 of the aforementioned Decree-Law emphasized the necessity of issuing the Executive Regulation 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 15 specified that the provisions of the present draft Decree-Law shall apply to beneficiaries from the date of publication of the Executive Regulation in the Official Gazette.