With real estate transactions nosediving in Kathmandu Valley, land revenue collection has declined drastically. Though was a marginal increment between mid-May and mid-June in revenue collection, the overall collection of five major Land Revenue Offices (LROs) of Kathmandu valley declined by about 26 percent in the first 11 months of the current fiscal year.

Latest statistics of Department of Land Reform and Management (DoLRM) show the LROs have been able to collect only Rs 2.79 billion against Rs 3.76 billion collected last year during the same period. Tightening of loans by banks and financial institutions (BFIs), imposition of capital gain tax and provision of income source disclosure contributed to the decline in realty transactions. “The reluctance on the part of BFIs to provide loans to the realty sector has affected the realty market,” said Gobinda Prasad Sapkota, director at DoLRM. “Central Bank’s directives to BFIs to reduce their loan exposure on real estate also hampered fund availability to the realty developers.”

One of the major LROs in the valley, Dillibazar LRO collected only Rs 881.36 million during the period against 1.36 billion last year. The other LROs too saw revenue collection shrinking during the period.

Transaction at Kalanki LRO declined by more than 22 percent. The office that collected Rs 560.89 million in the first 11 months of the previous fiscal year was able to collect only Rs 436.07 million this year. Chabahil LRO collected Rs 634.86 million during the period, a decline of 28 percent.

Bhaktapur and Lalitpur LROs both saw the same fate. The collection at Bhaktapur and Lalitpur LROs declined by 8 and 16 percent, respectively in the first 11 months of this fiscal year. Between mid-May and mid- June, things improved. All five LROs’ revenue was higher than that in the earlier month (mid-April to mid-May). Kathmandu LRO collected Rs 32.9 million from mid-May to mid- June while Chabahil LRO’s collection stood at Rs 30.6 million. Meanwhile, realty developers say the market won’t revive before the new budget. They are hoping that the new budget addresses their major concerns, i.e. abolishment of income source disclosure and reduction in capital gain tax.

Source: Post Report, Kathmandu (2010),'"Realty sector down, revenue shrinks", The Kathmandu Post-business, June 27 2010