Ministry of Finance: Real Estate Financing Law Allows Citizens to Access Subsidized Financing Through Banks Alongside Credit Bank Loans

The Ministry of Finance clarified that Law Decree No. (114) of 2026 concerning housing finance for beneficiaries of residential care allows eligible citizens to obtain housing financing from local banks and financing and investment companies subject to the supervision of the Central Bank of Kuwait, as an alternative option alongside the construction and purchase loans from 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 Law Decree represents a significant step in developing the housing finance system in the State of Kuwait, as it expands the financing options available to citizens and enhances the participation of the banking and financial sectors in the housing sector. The executive regulations will be issued within six months from the date of the publication of the Law Decree, along with 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 Law 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 Managing Director for Investment and Private Sector Projects at the Public Authority for Housing Welfare, and comprising Mr. 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 real estate developers accredited by the Public Authority for Housing Welfare, or constructing a plot allocated by the Authority. The provisions of the Law Decree do not apply to other purposes, such as expansion, renovation, purchasing from non-accredited developers, or construction on private plots.

Al-Ansari added that financing consists of two integrated parts: the first is subsidized financing, where the state bears the cost of its interest or returns, serving as an alternative 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 part is additional non-subsidized financing, limited to purchasers of residential units from real estate 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 loan 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 of the bank’s loans.

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

For his part, Committee member Mr. 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 counted within this duration, during which the repayment of the principal amount is deferred in cases of purchasing units on a plan from real estate developers or constructing a plot, provided the beneficiary bears 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 on the repaid portion being waived.

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, and permitted the rescheduling of financing for a period not exceeding five years, in line with instructions from the Central Bank of Kuwait. The executive regulations must include clear procedures that banks and funding entities must adhere to in the event of a beneficiary’s default, ensuring that such default does not lead to 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 owed to 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 no disposal of the property is permitted without prior approval from the Kuwait Credit Bank and the funding entity. The transferee must be among the eligible recipients of housing care who have 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.