Decree-Law Issued on Real Estate Financing for Housing Care Beneficiaries

Kuwait City, October 11 (KUNA) – Decree-Law No. 114 of 2026 concerning housing finance for beneficiaries of housing care was issued today, Sunday, 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 sustainable 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 a government plot allocated by the Public Authority for Housing Welfare, subject to the conditions and regulations set by the Authority for housing projects.

Article Three of the aforementioned decree-law stipulated the conditions for beneficiaries to qualify 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. This includes individuals who were allocated government plots by the Public Authority for Housing Welfare and were issued ownership documents, or those who 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 the 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 associated with the subsidized housing finance in accordance with the provisions of this decree-law.

Article Five of the aforementioned decree-law determined that all housing financings 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 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. The same article specified that housing finance for the purpose of construction on a 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-granting institutions to notify beneficiaries in case of failure to repay the housing finance provided to them, in accordance with the terms of the housing finance contract. In such cases, these institutions were authorized 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 responsibility for repaying the interest or returns resulting from the rescheduling period, whether the finance was subsidized or non-subsidized, 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 the procedures for mortgage financing, its restructuring, early repayment mechanisms, grace periods, default cases and their procedures, and borrower notification. Article Nine of the aforementioned decree-law authorized the Kuwait Credit Bank to act on behalf of the State in signing contracts with financing providers within the limits of the provisions of this decree-law and its executive regulations, and 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 financing providers in accordance with the conditions and procedures specified in the executive regulations. Article Ten decided that the bank, on behalf of the State, is committed to financing providers to repay the remaining balance of subsidized mortgage financing 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 repay the remaining balance of subsidized mortgage financing in case of borrower default, and that the mortgage is only established through an official mortgage contract. The same article stressed that the property must be specifically and accurately identified in the mortgage contract; otherwise, the mortgage is void. The registration of the mortgage securing the mortgage financing remains in effect throughout the contract period until the debt is fully settled. It also emphasized that the borrower may not dispose of the mortgaged property through sale, gift, or other dispositions, or establish any real right over it, except after obtaining prior approval from the bank and the mortgage financing provider, provided that the transferee is eligible for housing support and has not previously received mortgage financing, and on condition that the transferee accepts to assume the borrower’s obligations under 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 and document 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 stressed 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 apply to beneficiaries from the date of publication of the executive regulations in the Official Gazette. (End) J.Y.