The government has decided to allow non-resident Nepalis (NRNs) to own as much as two ropani (0.25 acre) of land and housing in Kathmandu Valley - a move which land and housing developers said will give a new boost to the sliding realty business. The bills committee of the cabinet, that finalized the NRN Regulations formulated to enforce the two-year-old NRN Act, recently gave its nod to NRNs buying and utilizing land and housing in Nepal.

“This is a welcome decision and it has fulfilled our long-standing demand to open the sector for NRN buyers,” said Ichchha Raj Tamang, president of Nepal Land and Housing Developers´ Association (NLHDA). Developers put NRNs at the top of their buyers´ list and Nepalis residing abroad are among key players in the market. However, Nepalis who do not have Nepali citizenship were not allowed to buy new land.

But once the new regulations comes into effect, they also will be able buy up to 0.25 acre in the Valley or eight kattha (0.65 acres) in the Tarai municipalities or five ropani (0.62 acre) in municipalities other than in the Valley and the Tarai. They could also own 3.26 acres of land in VDCs outside the Valley. Citing the investment this will bring into the sector, developers had demanded that the government allow all overseas buyers to own apartments in Nepal. The government, however, has responded positively with regard to NRNs only.

A positive indication of the new regulations had came during the budget speech when Finance Minister Surendra Pandey promised that the government would provide special ID cards to NRNs and welcome their involvement in the socio-economic development of Nepal, protecting their rights and welfare. The regulations incorporate the provision on ID cards for NRNs and also allow them to repatriate their investment and other income.

Developers said that the new provision will enable them overcome the recent downturn in business after the government imposed capital gains tax of five and 10 percent on realty deals. Imposition of VAT on housing construction has also increased the cost of housing by some six percent, thereby affecting sales. Owing to the cumulative impact of all these provisions which came into effect from this fiscal year, business has shrunk by 80 percent, NLHDA claims.

Transactions in land have also slowed down over the last three months especially after the banks and financial institutions pulled back from investing in real estate, on central bank instructions. The Nepal Rastra Bank instruction which came with the cautionary note that the realty bubble could burst soon also turned buyers away from the market. Since the last three months, land sales have dropped by as much as 35 percent, according to data at the land revenue offices.

Source: Republica