Finance Ministry: Real Estate Financing Law Offers Citizens Subsidized Bank Loans Parallel to Credit Bank Mortgages

The Ministry of Finance clarified that Legislative Decree No. (114) of 2026 concerning housing finance for eligible recipients of residential care allows citizens entitled to such support to obtain housing financing from local banks and financing and investment companies subject to the supervision of the Central Bank of Kuwait, as a parallel option to the construction and purchase loans offered by the Kuwait Credit Bank. The decree’s provisions will take effect from the date its executive regulations are published in the Official Gazette.

The Ministry noted that the legislative decree represents a significant step in developing Kuwait’s housing finance system, as it expands the financing options available to citizens and enhances the participation of the banking and financial sectors in the housing industry. The executive regulations will be issued within six months of the publication of the legislative decree, alongside the rules and regulations issued by the Central Bank of Kuwait regarding the granting of financing, including the interest rates or returns on non-subsidized financing.

The legislative decree is the result of the work of a committee formed by a decision of the Minister of Finance, chaired by Eng. Ahmed Mohammed Al-Ansari, Deputy General Manager for Investment and Private Sector Projects at the Public Authority for Housing Welfare, and comprising Faisal Fahad Al-Muzaini, Director of the Public Debt Department at the Ministry of Finance, along with specialists from relevant entities.

Committee Chairman Eng. Ahmed Al-Ansari clarified that financing is restricted to two specific purposes: purchasing a residential unit from developers accredited by the Public Authority for Housing Welfare, or constructing a residential plot allocated by the Authority. The provisions of the legislative decree do not apply to other purposes, such as expansion, renovation, purchasing from non-accredited developers, or building on private plots.

Al-Ansari added that the financing consists of two integrated components: the first is subsidized financing, where the state bears the cost of its interest or returns, serving as a parallel option to the construction and purchase loans from the Kuwait Credit Bank rather than a replacement for them, as citizens retain the right to choose between the two pathways. The second component is additional non-subsidized financing, limited to purchasers of residential units from accredited developers, provided by financing entities according to their credit terms, with state support restricted solely to the subsidized portion.

Al-Ansari explained that subsidized financing is granted only once to individuals who meet the conditions stipulated in the mortgage regulations of the Kuwait Credit Bank for the purposes of purchase or construction, and who have not previously benefited from state residential care, including obtaining any loans from the bank.

Al-Ansari emphasized that the legislative decree complements Law No. (118) of 2023 concerning the establishment of companies for the creation and economic development of cities or residential areas, and its amendments, thereby linking the development of housing supply with the provision of necessary financing tools to enable citizens to access housing.

For his part, committee member Faisal Al-Muzaini clarified that financing is repaid through equal monthly installments over a period not exceeding 25 years from the date financing disbursement begins. Beneficiaries may be granted a grace period, which counts toward this duration, during which the repayment of the principal is deferred in cases of purchasing units on plan from developers or constructing plots. However, beneficiaries must bear the interest or returns during the grace period. Beneficiaries also have the right to make full or partial early repayments, with future interest or returns waived for the repaid portion.

Regarding cases of delay and default in repayment, Al-Muzaini clarified that the Emiri Decree-Law obliged funding entities to issue a notice to the beneficiary in accordance with the procedures specified in the executive regulations. It also permitted the rescheduling of financing for a period not exceeding five years, in line with Central Bank of Kuwait directives, provided that the executive regulations include clear procedures that banks and funding entities must adhere to in the event of a beneficiary’s default, ensuring that default does not result in the foreclosure of the mortgage or the direct sale of the residence.

Al-Muzaini noted that the Kuwait Credit Bank, acting on behalf of the State, is committed to settling the remaining balance of the subsidized financing with the funding entity in case of beneficiary default, while retaining the right to recourse against the beneficiary for the amounts and costs paid, without implying any exemption of the beneficiary from their obligations.

He pointed out that the property remains mortgaged as security for the fulfillment of financing obligations until they are fully settled, and it cannot be disposed of without prior approval from both the Kuwait Credit Bank and the funding entity. The transferee must be an eligible recipient of housing care who has not previously received housing financing, and must assume the beneficiary’s obligations.

Al-Muzaini added that the Emiri Decree-Law empowered the Kuwait Credit Bank, or any entity designated by the competent Minister, to purchase housing financing in whole or in part from grantors, securitize or tokenize it, and offer it to investors, in accordance with the regulations of the Central Bank of Kuwait and the Capital Markets Authority. This aims to provide the necessary liquidity to sustain financing disbursements, contribute to diversifying investment instruments, and deepen local financial markets.

Al-Muzaini concluded by emphasizing that the Emiri Decree-Law strengthens the partnership between the State, the banking and financial sectors, and the real estate sector, thereby promoting family stability and stimulating the national economy.