Decree-Law Issued on Housing Finance for Eligible Beneficiaries - Sarmad

(KUNA) – Decree-Law No. 114 of 2026 concerning housing finance for housing care beneficiaries was issued today, Sunday, with the aim of providing housing care in a timely manner and removing the major material obstacles hindering this process. According to the explanatory memorandum accompanying the decree-law, which comprises 15 articles, it was introduced to ensure the sustainable provision of dignified housing for the Kuwaiti citizen 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 a government plot allocated by the Public Authority for Housing Welfare, subject to the conditions and regulations set by the Authority in housing projects.

Article Three of the aforementioned decree-law stipulated the conditions for beneficiary eligibility 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, whether through being allocated a government plot by the Public Authority for Housing Welfare and having received a title deed, or by obtaining 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 finance 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 finance, in accordance with the terms of the finance contract and the regulations of the Central Bank of Kuwait, while noting that the State bears the cost of interest or returns associated with subsidized housing finance in accordance with the provisions of this decree-law.

Article Five of the aforementioned decree-law determined that all housing finance must be repaid in equal monthly installments, with the repayment period not exceeding 25 years from the date the housing finance begins to be disbursed 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 the granting institutions to notify the beneficiary in case of failure to repay the housing finance provided by those institutions, in accordance with the terms of the housing finance contract. In such cases, these institutions were permitted 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 interest or returns resulting from the rescheduling period for both subsidized and non-subsidized housing finance, or to take legal action against the beneficiary.

Article Eight obligated the granting institutions to register housing finance cases and submit related documents to the Bank, while referring to the executive regulations to determine the procedures for housing finance, rescheduling, early repayment mechanisms, grace periods, and default cases.

and its procedures, and notifying the beneficiary. Article 9 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 Regulation. It also obliged the Ministry of Finance to pay the interest or returns accruing on the subsidized housing finance 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 Regulation.

Article 10 stipulated that the Bank, on behalf of the State, is committed to the housing finance providers to repay the outstanding balance of the subsidized housing finance in the event of the beneficiary’s default.

Article 11 clarified that the Bank obtains the mortgage in consideration for its commitment on behalf of the State to the housing finance providers to settle the remaining balance of the subsidized housing finance in case of the beneficiary’s default, and that the mortgage is only valid upon execution of an official mortgage deed. The same article emphasized that the property must be specifically and accurately identified in the mortgage deed; otherwise, the mortgage is void. The registration of the mortgage securing the housing finance shall not be cancelled throughout the contract period until the debt is fully settled.

It further affirmed that the beneficiary is not permitted to dispose of the mortgaged property through sale, gift, or other forms of disposal, or to establish any real right over it, except after obtaining prior approval from the Bank and the housing finance provider, provided that the transferee is eligible for housing assistance and has not previously received housing finance, and subject to the transferee’s acceptance to assume the obligations arising from the housing finance contract.

The same article referred to the Executive Regulation to determine the mechanisms and procedures for registering, managing, and disposing of the mortgage.

Article 12 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 housing finance 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 Regulation and the regulations of the Central Bank of Kuwait and the Capital Markets Authority.

Article 13 obliged the Central Bank of Kuwait to issue the specific rules and regulations for granting housing finance and to determine the interest or return rates applicable to non-subsidized finance.

Article 14 of the aforementioned Decree-Law emphasized the necessity of issuing the Executive Regulation 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 15 specified that the provisions of the draft Decree-Law shall apply to beneficiaries from the date of publication of the Executive Regulation in the Official Gazette.