Revenue collection through realty transaction in the Kathmandu valley during the fiscal year 2011-12 increased by 16 per cent when compared to previous fiscal.The house and land registration revenue accumulated from five collection centres totals to Rs 1.783 billion, while only Rs 1.533 billion was collected in the fiscal year 2010-11.

There are five Land Revenue Offices (LROs) in the valley -Kathmandu, Kalanki, Chabahil, Bhaktapur and Lalitpur.Among them, Lalitpur witnessed the highest growth rate of 22 per cent as opposed to the data of last fiscal year. The Lalitpur LRO fiscal year. The Lalitpur LRO had brought in Rs 252 million as revenue through registration last year, whereas the amount this year is a whopping Rs 309 million. Kathmandu, on the other hand, has high record of land and house transactions, with revenue collection of Rs 647 million. The least revenue collected was in Bhaktapur, where the amount totalled Rs 187 million.

Kamal Prasad Timilsina, undersecretary at Department of Land Reform and Management, says, “The growth in transaction is mainly because of favourable provisions made by government in the realty sector. Timely budget, rectification of earlier requirement to disclose the source of income for amount exceeding Rs five million to 10 million, time extension for renewing realty loans by banks and financial institutions (BFIs) and deduction of capital gain tax by 50 per cent helped boost the sector.“ Stating that the growth is natural rather than a significant one, Timilsina maintains, “Although the provision for it is already in place, lack of regulations has been hindering expats and non-resident Nepali (NRNs) from invest ing in realty. If the govern ment looks into this issue seriously, the realty sector could make progress in leaps and bounds.“

Expressing optimism about exceeding the set revenue collection target for this fiscal year, he informs that they have already collected Rs 496 million in registration revenue for June-July (Asar), while their target was only Rs 356 million. According to Timilsina, introduction of different ranges of the housing colonies and apartments could have boosted the purchasing capacity of buyers, thereby resulting in the increase in revenue collection in 2011-12.

Rajan Khatri, chief tax officer at Tax Service Office, Chabahil, credits the increase in revenue collection to friendly policies initiated by the government and NRB. Meanwhile, Bijay Rajbhandary, chairman and managing director of CE Construction, says, “Relaxing the income disclosure provision on land and housing purchases and raising the threshold to Rs 10 million, Nepal Rastra Bank's policy for BFIs in terms of realty loan, increased confidence in developers and customers as well as reduction in capital gain tax helped to mobilise the stagnant realty market to some extent.“ According to him, the transaction and growth in realty is on a need basis.

“Genuine buyers who have been holding their property invested after seeing positive changes and professionals also introduced new housings and apartments that boosted the real estate transactions,“ says Rajbhandary, adding that developers are still unable to provide housings as per the valley's demand. Stating that realty transactions have not reached optimum level, Rajbhandary says, “Till date, 95 per cent of transactions are conducted on need basis and only five per cent is for investment. If government deducts the investment amount for expats and NRNs from USD 200,000 to USD 100,000, realty sector could witness fund mobilisation during this stagnant period and see significant change in the coming years.“

source: The Himalayan Times,28 July 2012