Kathmandu. The real estate business in Nepal has been sluggish recently. The lack of growth in real estate transactions has put the business in a difficult position, and the government’s income is also being affected. If we look at government statistics, the transactions are not growing as expected. With the sharp decline in income, the government has also faced the challenge of raising this sector.
According to the Department of Land Management and Records, which keeps records of real estate transactions, it appears that 3.87 billion 24 lakh 81 thousand 647 crores of revenue was collected in the last month of Magh. 4.25 billion 22 lakh 21 thousand 779 crores of revenue was collected in the last month of Poush.
According to the department, 3.87 billion 48 lakh 26 thousand 976 crores of revenue was received in the last month of Mangsir. According to the details of the seven months of the current fiscal year, there has been a modest increase in revenue collection. Compared to the same period last fiscal year, revenue collection has increased by nearly 14 percent in the seven months of the current fiscal year.
According to the data of the Department of Land Management and Records, a total of 24.71 billion rupees have been collected in the current fiscal year by the end of Magh. In the same period last fiscal year, 21.65 billion rupees were collected in the same period.
A total of 46,50,069 deeds were passed in Magh, while the number was 48,156 in Poush. Thus, the main reason why this area appears to be stagnant according to government data is the government, says Bishnu Prasad Ghimire, President of the Nepal Land and Housing Development Federation.
According to him, when the division of land was stopped for classification, there was instability in land transactions. Classification is still not being done in all municipalities. It has not been done in the way it should have been and there is still confusion.
The real estate business has been stopped due to the unnecessary increase in interest rates by financial institutions and putting pressure on businessmen. The real estate business is also being affected because the policy of the National Bank has not been improved yet.
Monetary policy comes every three months but it does not cover much in the real estate sector. Monetary policy has not been able to address any issue in the past three to four years. Neither banks nor the National Bank trust those who invest in real estate. He understands that the real estate business has also been affected because the government has not done the necessary classification and other work.
Ghimire said, “Repeatedly stopping land allotment, and even the local level and provincial governments adopting ambiguous policies have created problems. The Kathmandu Valley Authority is stopping land, not allowing land to be allotted, and for years the Kathmandu Valley Authority has not been able to sell the land that has been blocked in the name of Smart City. No structures or new roads have been built there, while farmers and the public have been in a state of confusion for 12/14 years. As a result, laxity is happening.”
According to him, the land ordinance brought by the government could have provided some relief in the real estate sector, but due to political wrangling, the ordinance became inactive.
Chairman Ghimire said, “Real estate entrepreneurs were not very happy after the land ordinance came. But some things were addressed. For example, in the Kathmandu Valley, land cannot be planned above 25 ropanis or sold even if land is bought, and there is a limit of 11 bighas in the Terai region.
The scope was expanded by addressing that. This means that there is not enough land to build new cities, so we welcomed the policy brought by the government as a good one. But the opposition parties unnecessarily spread the ordinance and made it an issue. That was wrong. Although the government brought the land bank into the spotlight to organize the real estate, it has not been implemented yet,” he said.
Ghimire says that the government is failing to take effective steps to implement such programs. He said, ‘Land Bank is a very good thing. If the government can identify vacant land in our country and put it to commercial use through Land Bank, it seems that it will be productive.’
According to Ghimire, the first thing to make the real estate sector dynamic is that stability is necessary, but it is also necessary to increase trust. He said that even if there is a lot of money in the bank, it is not possible to take a loan.
Ghimire says, ‘There is money in the bank, they are calling for a loan, and if you take a loan, it is not certain when the interest rate will increase tomorrow and where it will go. Banks should be able to assure borrowers that we will not increase interest for so many years. If that happens, a businessman can buy and sell with confidence by taking a loan. The National Bank is withdrawing money saying that there is liquidity. As long as the money is not mobile, there will be no income from it. More than 1.2 trillion rupees of loanable money has been passed through the bank. This is not good. A new governor is coming in the next few days, a good plan should be brought to make the country prosperous and the private sector mobile.’
The government is preparing the budget for the coming year. While the budget is being prepared, real estate entrepreneurs are not very excited. The only reason is that the programs included in the budget are not being implemented. Ghimire, the president of the Land and Housing Development Federation, says that although it sounds good every year, the implementation aspect is not enthusiastic.
He said, ‘For the benefit of real estate entrepreneurs, things like organizing this business, arranging licenses, conducting real estate transactions through companies, and giving apartments to foreigners are included in the budget, but they could not be implemented. Another thing is that the government should only bring in the budget those things that can be implemented.’
According to him, the reason for the budget not being implemented is the change of government repeatedly.
He said, ‘Such programs have not been implemented because the leadership has changed and the employees have also been made unstable. The disease of employees who do not understand land and do not understand it, and when they start understanding something, it is transmitted is more visible now. That may have made it difficult to implement the programs included in the budget.’
Although the government has said that real estate transaction companies should be established, it has not been implemented yet. Ghimire says that the main reason for the non-implementation is the government. According to him, there are many problems in doing real estate transactions through companies.
He said, ‘Where we do business through a company, the company must obtain a planning permit. Individuals do not have to obtain one. The company has worked according to the standards by including all the big roads, open areas, and gardens, but when it is done individually, it is not done. Due to this, our cities and villages are in chaos. But it seems that the company that does business is being punished a little too much. When the company does business, it gets a permit and pays all the revenue. But those who do business individually do not have to pay any fees. Their work is easy. It is easy to work from land revenue and survey.’
According to him, when doing real estate business through a company, the revenue is also higher. The company has to pay 25 percent of the profit. Whereas the individual has to pay 7.5 percent. Such a thing that would benefit the state is not being done through real estate business companies, even though real estate businessmen have repeatedly said.
Ghimire understands that he does not understand why the government has failed in the matter of doing business through companies even though the government itself would have more income. According to him, it seems like the government is trying to tell real estate agents to leave the company and go into personal business. But that is not good. He says that the government needs to pay serious attention to this so that service recipients who have done business with the company can feel secure.
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