Kuwait issues new mortgage financing law for housing beneficiaries

KUWAIT: Kuwait has issued a new decree-law governing mortgage financing for housing welfare beneficiaries, aiming to ensure a sustainable supply of adequate housing for Kuwaiti citizens, the Kuwait News Agency (KUNA) reported on Sunday.

Decree-Law No. 114 of 2026 sets out the rules for supported and non-supported mortgage financing, repayment terms and the responsibilities of banks and financing entities.

Under Article 3, applicants must meet the general conditions set out in Kuwait Credit Bank's real estate loan regulations for purchasing or constructing a home. They must also not have previously received housing welfare from the State.

The law allows beneficiaries to combine supported and non-supported mortgage financing, subject to rules and procedures set by the Central Bank of Kuwait.

Repayment period capped at 25 years

Article 5 stipulates that mortgage financing must be repaid in equal monthly instalments, with the repayment period capped at 25 years from the date the financing is first disbursed.

The legislation also sets out procedures for financing the purchase of housing units from real estate developers and for construction on government housing plots. Financing for construction will be disbursed in stages in line with banking rules.

Under Article 7, financing entities must notify beneficiaries who fail to meet their repayment obligations. They may reschedule financing for up to five years, subject to Central Bank regulations, with beneficiaries responsible for any interest or returns arising during the rescheduling period.

State guarantee for supported financing

The law authorises Kuwait Credit Bank to sign agreements with financing entities on behalf of the State.

The Ministry of Finance will pay interest or returns on supported financing to Kuwait Credit Bank from the General Reserve, which will then transfer the payments to financing entities.

Kuwait Credit Bank will also guarantee payment of the outstanding balance of supported mortgage financing to financing entities if a beneficiary defaults.

The bank may obtain a mortgage over the property as security for its obligations on behalf of the State. The mortgage will take effect only through an official mortgage contract.

The legislation also allows Kuwait Credit Bank, or an entity designated by the competent minister, to purchase all or part of the mortgage financing provided to beneficiaries by financing entities.

Central Bank to set financing rules

The Central Bank of Kuwait will issue regulations governing mortgage financing and determine the interest rates or returns applicable to non-supported financing.

The decree-law's executive regulations must be issued by decree, following a proposal from the competent minister, within six months of publication in the Official Gazette.

The provisions will apply to beneficiaries from the date the executive regulations are published in the Official Gazette.