Finance Ministry: Real Estate Financing Law Enables Citizens to Access Subsidized Financing via Banks - Sarmad

The Ministry of Finance announced that Legislative Decree No. (114) of 2026 concerning housing finance for eligible recipients 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 a parallel option to the construction and purchase loans offered by the Kuwait Credit Bank. The decree’s provisions will take effect from the date its executive regulations are published in the Official Gazette.

In a press statement issued on Thursday, the Ministry stated that the legislative decree represents an important 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 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.

Ahmed Al-Ansari, head of the committee formed for this purpose by a ministerial decision, said in a press statement issued by the Ministry 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 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 parts: the first is subsidized financing, where the state bears the cost of its interest or returns, serving as a parallel 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 buyers of residential units from real estate developers, provided by financing entities according to their credit terms, with state support restricted to the subsidized portion.

He clarified that subsidized financing is granted only once to individuals who meet the conditions stipulated in the mortgage regulations of the Kuwait Credit Bank for the purposes of purchase or construction, and who have not previously benefited from state housing care, including obtaining any of the bank’s loans.

Al-Ansari emphasized 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, according to the statement, 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 counts toward 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. However, the beneficiary 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 legislative decree obligates financing entities to issue a notice to the beneficiary according to procedures specified in the executive regulations. It also permits rescheduling the financing for a period not exceeding five years, in accordance with instructions from the Central Bank of Kuwait. The executive regulations will include clear procedures that banks and financing entities must follow in the event of a beneficiary’s default, ensuring that default does not result in foreclosure or direct sale of the residence.

He noted that the Kuwait Credit Bank, on behalf of the state, is committed to settling the remaining balance of subsidized financing to the lending institution in the event of the beneficiary’s default, while retaining the right to seek recourse against the beneficiary for amounts and costs paid, without implying any exemption of the beneficiary from his obligations.

He pointed out that the property remains mortgaged as security for the fulfillment of financing obligations until they are fully settled, and that it cannot be disposed of without prior approval from the Kuwait Credit Bank and the lending institution. The transferee must be eligible for housing care, must not have previously received real estate financing, and must assume the beneficiary’s obligations.

He added that the Law-Decree allows the Kuwait Credit Bank or any entity designated by the competent minister to purchase real estate financings, in whole or in part, from granting institutions, 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.

He emphasized that the Law-Decree strengthens the partnership between the state, the banking and financial sectors, and the real estate sector, thereby contributing to family stability and revitalizing the national economy.

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