"Finance": "Real Estate Financing"... A Parallel Financing Option for "Al-Eteham Bank" Loans

The Ministry of Finance clarified 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 an alternative option to the construction and purchase loans from the Kuwait Credit Bank. Its provisions shall apply from the date its executive regulation is published in the Official Gazette.

The Ministry noted that the legislative decree represents an important step in developing the housing finance system in the State of Kuwait, as it expands the available financing options for 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, 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 including 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 plot allocated by the Authority. The provisions of the legislative decree do not apply to other purposes, such as expansion, renovation, purchase 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, not 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.

Al-Ansari explained that subsidized financing is granted only once to those 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 obtaining any of the bank’s loans.

He emphasized that the legislative decree complements Law No. (118) of 2023 concerning the establishment of companies for the construction and economic development of cities or residential 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 Faisal Al-Muzaini clarified that financing is repaid in 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 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 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 regulation. It also permits rescheduling the financing for a period not exceeding five years, in accordance with instructions from the Central Bank of Kuwait, with the executive regulation including clear procedures.

Banks and financing entities are bound by these provisions 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-Muzaini noted that the Kuwait Credit Bank, acting on behalf of the state, is obligated to settle the remaining balance of the subsidized financing with the financing 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 his obligations.

Al-Muzaini emphasized 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 financing entity. The transferee must be eligible for housing care, must not have 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 financing in full 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 provides the necessary liquidity to sustain financing disbursements, contributes to diversifying investment instruments, and deepens local financial markets.

Al-Muzaini concluded by stressing that the Law Decree strengthens the partnership between the state, the banking and financial sectors, and the real estate sector, thereby promoting family stability and revitalizing the national economy.