NEFPORT ISSUE 41 – JULY 2020
REALESTATE ESTATE REAL The increasing spread of the pandemic has disrupted the production of construction materials and investment in Real estate. The government has been trying to bring a surge in the demand for construction materials through the softening of lending limit for home loans. The new budget of FY 2020/21 also incorporates some new programs to provide safe residence and properly utilize the available lands, while giving continuation to the ongoing ones. In this budget, the government has taken the initiative to systematize and organize the real estate sector in the country. Land Act 2020 imposes a new land ceiling: The eighth amendment of the
land act-2020 stipulates a provision regarding the regulation of exception granted to owning or possessing land above the ceiling. Land ceiling limit for a person or family is 10 bigha in the Tarai, 25 ropani in Kathmandu valley, and 70 ropani in hilly regions as per Section 7 of the act. However, this provision shall not apply to the land owned by the Government of Nepal, district coordination committees, municipalities, and educational or health institutions, industries, and foreign institutions as prescribed by the federal government. Moreover, the act has also set a provision to provide land to landless squatters. According to Section 52 of the act, landless squatters, who have been using government or unrecorded land, shall be entitled to a certain portion of such land. The land provided under this law may not be transferred to anyone or otherwise disposed of in any form for at least 10 years113.
Central Bank turns flexible on home loans: The Nepal Rastra Bank has
softened its lending limit for first-time homebuyers as the upper limit of debt service to gross income ratio (DTI) has been raised for the first-time purchaser
of a residential home. According to the revised policy, the limit for the home loan for the housing business in metropolitan, sub-metropolitan, and municipalities adjoining to Kathmandu Metropolitan is raised to 50 % from 40 %. Similarly, in other locations, it has been raised to 60 %, which was 50 % previously. This means, individuals having income over NPR 100,000 (USD 852) per month, can receive a home loan to pay the monthly installment of up to NPR 60,000 (USD 511.33)114. In addition, the changed policy is expected to give pace to the businesses of construction materials, helping speed up the economic growth. Many construction materials manufacturers have been running under capacity due to decreased demands. 88% of progress made in the reconstruction of private houses:
The National Reconstruction Authority (NRA) stated that 88 % of progress has been achieved in the reconstruction of private houses since the earthquake five years ago. According to the NRA data, reconstruction of the private houses of 494,044 beneficiaries or 63 % has been completed so far while the houses of additional 190,145 beneficiaries or 25 % are in the reconstruction phase. Moreover,
the number of beneficiaries certified for payment of the final tranche of the house construction grants has reached 561,650 or 72 %115. Land Revenue offices open after two and a half months: All Inland
Revenue offices across the country resumed its services from 7 June 2020. The offices were closed after the imposition of lockdown by the government to avoid the spread of COVID-19, disrupting the services provided. The offices reopened by adopting health safety protocols116.
Key highlights from the Budget 2020/21: The new fiscal year budget
has added some new programs while giving continuation to the ongoing ones. Registration of land and houses along with other services of land revenue offices will be made online in all the districts of Nepal. This year’s budget has incorporated a safe residence program where at least 100 thousand families having a thatched roof will get corrugated zinc sheet within 3 years. For this, the government has allocated NPR 3.5 billion (USD 29.83 million). For the productive and proper utilization of available land, the government will be segregating the land for industrial,
37
