Real estate sector faces crisis after land ceiling rule: NLHDF
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KATHMANDU: The country's organised real estate sector is facing a severe crisis after the government introduced a land ceiling rule, the Nepal Land and Housing Developers’ Federation (NLHDF) said in a press statement on Wednesday.
The federation said the sector, which has operated steadily for three decades and contributed to economic activity and employment, has been hit hard by a provision introduced in 2076 BS that limits companies to holding no more than 30 ropanis of land. Companies that exceed the limit are reportedly barred from selling or distributing the excess land.
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According to real estate developers, buying land, developing it and selling finished units is the core of their business, and land functions as working capital. They said the ceiling has effectively halted the business cycle and stalled projects.
The slowdown has had ripple effects across related industries, the federation said. Demand for construction materials such as cement and iron rods has fallen, and employment from unskilled labourers to engineers has been affected.
Developers who financed projects with bank loans say they are now able only to service interest because they cannot sell or legally transfer land, creating stress for both businesses and financial institutions. The NLHDF warned this could put the wider financial sector at risk.
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The federation also said thousands of homebuyers who have paid in full are unable to register land ownership in their names, increasing financial insecurity and mental stress among ordinary citizens.
Meanwhile, the NLHDF urged the government to address the issue in the budget for upcoming fiscal year, arguing that the 30-ropani limit is impractical for urban development and large-city projects. It called on authorities to relax the ceiling and make it easier to buy and sell land for commercial development.
Entrepreneurs said resolving the rule would allow banks and financial institutions (BFIs) to recover loans, restart stalled projects and revive economic activity.
