KATHMANDU, NOVEMBER 8

The recently introduced Land Use Regulation 2022, which requires the local government to classify the land under its jurisdiction into agricultural and non-agricultural land, has plunged the real estate market in turmoil, with the number of transactions slumping by nearly 50 per cent.

According to the records of the Department of Land Management and Archive (DoL- MA), altogether 25,789 houses and plots of land were bought and sold across the country in a one-month period between mid-September and mid-October this year.

As per the department, the total number of properties sold in the first quarter of this fiscal (mid-July to mid-October) stood at 94,343, a sharp drop compared to 204,734 properties that changed hands in the same period of previous fiscal 2021-22.

Real estate businessmen said that the trade has been affected as the Ministry of Land Management, Cooperatives, and Poverty Alleviation (MoLMCPA) has introduced the new regulation that is unfavourable to the realty sector.

Alleging that the government lacks any specific plan to implement the regulation that is infeasible for a country like Nepal, Bidhur Dhamala, acting president of the Nepal Land and Housing Developers Association (NLHDA), said.

'Apart from a few areas such as Manohara and Hetauda, plotting of the land has pretty much come to a standstill since the new rules were implemented. The government is trying copy the rules of the European countries by adopting the new regulation which is impractical for Nepal.'

As per the new regulations, land has to be categorised as agricultural, residential, commercial, industrial, area of mines and minerals, forest, public use, area of cultural and archaeological importance, and others based on topographic features, efficiency and utility of land, its existing use and necessity.

The regulations prohibit the commercial land plotting and its sale in areas except in classified areas for residential purposes.

'Since most people use their empty plots for agricultural purposes, they have been unable to sell their land. And I don't think they can sustain themselves only depending on agriculture,' Dhamala told The Himalayan Times.

However, Information Officer of DoLMA Bishnu Kumar Mahat said that the government has introduced the new regulation to manage land utilisation, prioritising the production-based economy and systematic urban development.

'As the new policy is still in its infancy phase, the local governments have been slow in adopting it. Now a few local governments have initiated the process for classification of land and I believe the graph of plotting and other realty activities will increase in the near future,' Mahat informed.

He further stated that the Nepal Rastra Bank (NRB)'s strict policy towards the realty sector, liquidity crunch, the festive season and the upcoming general elections have stagnated the real estate activities.

'Thus, the revenue generated from real estate business decelerated in the review period.'

According to the department, the government collected revenue worth Rs 2.56 billion in the review month, with the total collection for the first quarter at Rs 8.85 billion.

The amount was a staggering 62.69 per cent down compared to Rs 23.72 billion collected in revenue in the first quarter of 2022-23.

The property sales in the Kathmandu valley also remained tepid in the review month.

According to the data of the Land Revenue Department, nine Land Revenue Offices in the three districts of the valley reported sales of 2,761 properties compared to 3,450 properties in mid-August to mid-September.

As per the department, the highest number of property sales was from the Land Revenue Office (LRO) Kalanki, with 620 land and houses bought and sold.

Likewise, 606 land and houses were sold and bought from LRO Lagankhel, 540 from LRO Bhaktapur , 1,038 from LRO Sankhu, 346 from LRO Chabahil, none from LRO Manamaiju, 137 from LRO Dilli Bazaar, 92 from LRO Tokha and 19 from LRO Gotikhel, respectively.

A version of this article appears in the print on November 9, 2022 of The Himalayan Times.