The government’s plan to let non-resident Nepalis (NRN) and foreigners purchase apartments and houses in Nepal doesn’t look like happening in the near future due to a number of legal complications.

While presenting the budget for fiscal 2011-12, the government had announced allowing NRNs and foreigners to purchase houses and apartments in a bid to stimulate the real estate sector which was going through a recession then. Although the government had promised giving such permission by introducing a guideline by mid-October 2011, it has not been issued even after two years.

On Wednesday, officials from different ministries held a discussion at the Ministry of Foreign Affairs (MoFA) in an effort to remove the confusion on how to take the process forward. During the meeting, they concluded that the plan could not be implemented without first amending the NRN Act 2008.

“The NRN Act allows Nepalis living abroad to buy homes here. However, it doesn’t say anything about the issues of quantity and price,” said Arjun Bahadur Thapa, secretary at the MoFA.

Representatives from the stakeholder ministries including the Ministry of Land Reform and Management, Ministry of Home Affairs and the Prime Minister’s Office also took part in the meeting. The NRN Act states that NRNs can buy land up to 2 ropanis in area; however, it does not say anything about apartments.

MoFA Spokesperson Deepak Thapa said that despite realizing the necessity of amending the act to implement the policy without problems, the meeting decided to make an effort to introduce the facility without doing so.

“The MoFA is positive about letting foreigners and NRNs buy homes here. We are looking for a suitable modality,” he said. If the process of amending the act is initiated, it will take a long time as Parliament needs to discuss the matter and endorse the proposed amendment. If the measure is introduced through only a regulation, a cabinet decision is enough.

Although the budget for the fiscal year 2011-12 has also talked about allowing foreigners to purchase apartments and housing units, the participants at the meeting on Wednesday said that they only focussed on enabling NRNs to purchase them. 

As per the budgetary provision of that year, foreign individuals and companies will be permitted to buy flats and apartments costing US$ 200,000 or more.

For this, the Ministry of Land Reform and Management was told to prepare the necessary guidelines by mid-October 2011. The budget had also provisioned that foreign buyers of such units would not be allowed to sell them for five years.

As per the budgetary provision, the ministry has also prepared a draft of the guideline which has provisioned that only 20 percent of the available apartments would be allowed to be sold to foreigners.

However, the plan took a backseat after the Ministry of Home Affairs raised security concerns of allowing foreigners to purchase such properties.

The ministry also raised concerns over the long-term consequences of such a facility as the country is located between two giant countries with more than one billion population each.

The ministry had also raised multiple questions, including whether foreigners shall be allowed to live in the country forever on the logic that they have purchased an apartment here.

Real estate traders have, however, insisted that they want a provision allowing sale of apartments to foreigners instead of NRNs. “As NRNs are more enthusiastic about purchasing land and building homes than purchasing apartments, only selling the remaining apartments to foreigners makes sense,” said Min Man Shrestha, general secretary of the Nepal Land and Housing Developers’ Association (NLHDA).

According to him, around 6,000 apartments are left after the sale of 7,000 units so far. Shrestha said that the government seemed to be more serious than required regarding security issues.

“When foreigners buy homes here, they can be scrutinized more closely than is possible in today’s situation where they have no particular address,” said Shrestha.

He added that the government’s failure to implement the plan had delayed the recovery of the real estate sector.

source: the kathmandu post,13 Dec 2013