Finance Ministry: 'Real Estate Financing' Enables Citizens to Access Subsidized Financing via Banks Alongside Kuwait Credit Bank Loans

The Ministry of Finance clarified that Legislative Decree-Law No. (114) of 2026 regarding housing finance for beneficiaries of housing 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 to the construction and purchase loans from the Kuwait Credit Bank. The decree’s provisions will take effect from the date its executive regulation is published in the Official Gazette.

In a press statement, the Ministry indicated that the Legislative Decree-Law represents an important 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 sector. The executive regulation will be issued within six months from the date of publication of the Legislative Decree-Law, alongside the rules and regulations issued by the Central Bank of Kuwait for granting financing, including the interest rates or returns on non-subsidized financing.

The Ministry stated that the Legislative Decree-Law is the result of the work of a committee formed by a decision of the Minister of Finance, chaired by Ahmed Al-Ansari, Deputy Managing Director for Investment and Private Sector Projects at the Public Authority for Housing Welfare, and comprising Faisal Al-Muzaini, Director of the Public Debt Department at the Ministry of Finance, along with specialists from relevant entities.

Committee Chairman Ahmed Al-Ansari clarified that financing is limited to two specific purposes: purchasing a residential unit from real estate developers accredited by the Public Authority for Housing Welfare, or constructing on a government plot allocated by the Authority. The provisions of the Legislative Decree-Law do not apply to other purposes, such as expansion, renovation, purchasing from non-accredited developers, or building 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 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 channels. The second part is additional non-subsidized financing, limited to buyers of residential units from real estate developers and provided by financing entities according to their credit terms, with state support restricted 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 housing care, including receiving any loans from the bank.

He emphasized that the Legislative Decree-Law 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 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 included within this duration, during which the repayment of the principal amount is deferred in cases of purchasing on a plan from real estate developers or constructing on a plot. However, beneficiaries must bear the interest or returns during the grace period. Beneficiaries also have the right to make full or partial early repayment, with future interest or returns waived for the repaid portion.

Regarding cases of delay and default in repayment, Al-Muzaini stated that the Law-Decree obligates funding entities to issue a notice to the beneficiary in accordance with the procedures specified in the executive regulation, and permits the rescheduling of financing for a period not exceeding five years, in line with instructions from the Central Bank of Kuwait. The executive regulation must include clear procedures that banks and funding entities must adhere to in the event of a beneficiary’s default, ensuring that default does not lead to the foreclosure or direct sale of the residence. Al-Muzaini noted that the Kuwait Credit Bank, acting on behalf of the State, is committed to settling the outstanding balance of subsidized financing to the funding 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 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 Law-Decree empowers the Kuwait Credit Bank, or any entity designated by the competent Minister, to purchase housing financings, in whole or in part, from funding entities, securitize or tokenize them, and offer them to investors, in accordance with the regulations of the Central Bank of Kuwait and the Capital Markets Authority. This provides the necessary liquidity to sustain financing disbursements, contributes to diversifying investment instruments, and deepens local financial markets. Al-Muzaini concluded by affirming that the Law-Decree strengthens partnerships between the State, the banking and financial sectors, and the real estate sector, thereby promoting family stability and revitalizing the national economy.