Despite an uptick in the real estate sector in the recent months, the Land Use Regulation 2022, along with liquidity crunch continues to pose challenges for the realty market, with the number of transactions slumping by nearly 45 per cent.

According to the records of the Department of Land Management and Archive (DoLMA), altogether 40,734 houses and plots of land were bought and sold across the country in a one-month period between mid-February and mid- March this year.

As per the department, the total number of properties sold stood at 74,036 in the same period of previous fiscal 2021-22, which clearly paints a gloomy picture of the property business in the country.

Bidhur Dhamala, the acting president of the Nepal Land and Housing Developers Association (NLHDA), expressed concerns that the government's rules regarding land utilisation have added to the difficulties that the industry is facing, exacerbating an already challenging situation that has been caused in part by the strict policies of the Nepal Rastra Bank (NRB).

"Despite the good intentions behind introducing the regulation for systematic urbanisation, it is irrelevant for a developing country like Nepal. With the inadequate budget and manpower, it is a daunting task for the local governments to classify the land as agricultural or non-agricultural," Dhamala said.

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 topographical 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.

Due to the delay in classification of land, the government had directed local authorities to undertake the task of land classification until December 9.

"However, of the total 753 local levels, only 142 have initiated the process for classification of land so far," said Spokesperson for DoLMA Krishna Prasad Bhandari.

"The land utilisation act is one of the major factors that dampened the property market during the ongoing fiscal year compared to last fiscal year," Bhandari told The Himalayan Times.

"But in the recent months, there have been encouraging signs in plotting and other realty activities."

The number of properties traded also decreased by 300 compared to the earlier month (mid-January to mid-February), when 41,086 properties (houses and land) were sold across the country.

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

According to the department, the government collected revenue worth Rs three billion from real estate transactions in the review month, a fall of Rs 750 million compared to the previous month, when revenue worth Rs 3.750 billion had been generated from real estate business.

Meanwhile, the property sales in the Kathmandu valley improved slightly 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 4,359 properties compared to 4,195 properties in between mid-January and mid-February.

As per the department, the highest number of property sales was from the Land Revenue Office (LRO) Bhaktapur, with 1,113 land and houses bought and sold. Likewise, 1,031 land and houses were sold and bought from LRO Lagankhel, 701 from LRO Kalanaki, 484 from LRO Sankhu, 434 from LRO Chabahil, 274 from LRO Manamaiju, 190 from LRO Dilli Bazaar, 113 from LRO Tokha and 19 from LRO Gotikhel, respectively.

source: Himalayan News Service Kathmandu, March 17