Finance Ministry: Real Estate Financing is a Parallel Option to 'Credit'

The Ministry of Finance clarified that Legislative 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 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, 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 legislative decree is the result of the work of a committee formed by a decision of the Minister of Finance, chaired by Ahmed Mohammed Al-Ansari, Deputy Managing Director 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 authorities.

Committee Chairman 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 construction 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. This serves as an alternative option to the construction and purchase loans from the Kuwait Credit Bank, not 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 buyers of residential units from accredited developers, provided by financing institutions according to their credit terms. State support is restricted to the subsidized portion.

Al-Ansari emphasized 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.

He confirmed that the legislative decree complements Law No. (118) of 2023 concerning the establishment of companies for the creation 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 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 is counted within this duration, during which the repayment of the principal is deferred in cases of purchasing units on a plan from developers or constructing a plot. However, the beneficiary remains responsible for 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-Mutairi clarified that the Emiri Decree-Law obliged financing 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 financing entities must adhere to in the event of a beneficiary’s default, ensuring that default does not lead to the foreclosure of the mortgage or the direct sale of the residence. Al-Mutairi noted that the Kuwait Credit Bank, acting on behalf of the State, is committed to settling the outstanding balance of the subsidized financing with the financing entity in case of beneficiary default, while retaining the right to recourse against the beneficiary for amounts paid and associated costs, without implying any exemption of the beneficiary from their obligations. He emphasized that the property remains mortgaged as security for the fulfillment of financing obligations until full repayment, and no disposal of the property is permitted without prior approval from the Kuwait Credit Bank and the financing 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-Mutairi 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-Mutairi concluded by stressing 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.