Kuwait decree opens housing loans to securitization, extends repayment to 25 years

Summary

• Decree-Law 114 of 2026 regulates subsidized and unsubsidized real estate financing for housing welfare beneficiaries.
• Repayment may run up to 25 years, with the state covering interest on subsidized financing.
• Credit Bank of Kuwait may buy, securitize and sell the loans to investors.

The latest

Kuwait issued Decree-Law 114 of 2026 on real estate financing for housing welfare beneficiaries on Sunday, 11 October 2026, setting repayment at up to 25 years from the disbursement date. The 15-article decree covers financing to buy a unit from a licensed developer under Law 118 of 2023, or to build on a government plot allocated by the Public Authority for Housing Welfare, according to KUNA.

Details

• The securitization clause: Article 12 allows Credit Bank of Kuwait, or an entity designated by the competent minister, to purchase all or part of the financing from lenders, securitize it, sell it to investors and buy it back. The decree frames it as an investment instrument strengthening the economic environment, under rules set by the Central Bank of Kuwait and the Capital Markets Authority.
• Who pays the interest: The state bears the cost of interest or returns on subsidized financing through the Ministry of Finance, drawn from the General Reserve account. Credit Bank of Kuwait is tasked with paying those amounts to the granting institutions on the state's behalf, according to KUNA's summary of the decree's provisions.
• The regulator's role: The Central Bank of Kuwait sets the rules and controls governing the granting of real estate financing. It also determines the rate of interest or returns applied to unsubsidized financing, leaving pricing of the non-subsidized tier to the monetary authority rather than fixing it in the decree text.
• Default handling: If a beneficiary falls behind, the financing may be rescheduled for a period not exceeding 5 years, in line with instructions issued by the Central Bank of Kuwait. Credit Bank of Kuwait obtains a real estate mortgage as security for the obligation it carries on behalf of the state.
• What it finances: Two uses are covered: purchasing a housing unit from a real estate developer licensed under Law 118 of 2023, and building on a government plot allocated by the Public Authority for Housing Welfare. The decree applies to both subsidized and unsubsidized financing under the same framework.
• The timeline: Executive regulations are to be issued within 6 months of the decree's publication in the Official Gazette. The provisions take effect for beneficiaries only from the date those regulations are published, meaning the framework does not reach applicants immediately on issuance.
• The repayment ceiling: Repayment is capped at 25 years from the date the financing is disbursed by the granting institution. The decree does not set a maximum financing amount or specify eligibility thresholds, leaving those to the executive regulations still to come.

Background

Kuwait's housing welfare system has long relied on state-allocated plots and direct public lending. Law 118 of 2023 introduced licensed real estate developers into the supply chain, and the new decree ties financing to that framework by covering purchases from those developers alongside construction on government plots.

Between the lines

Article 12 is the structural shift: by allowing Credit Bank of Kuwait to securitize and sell housing loans to investors, the state can recycle capital rather than hold the paper to maturity. Pairing that with a 25-year ceiling and a Finance Ministry interest subsidy drawn from the General Reserve points to spreading the fiscal load across markets and time.

What's next

Watch for publication of the decree in the Official Gazette, then the executive regulations due within 6 months, which trigger application to beneficiaries. Central Bank and Capital Markets Authority rules on securitization are the next concrete signal.

Source: Kuwait News Agency (KUNA)