Under these schemes, developers have mainly asked the government to support the housing projects by extending roads, sewerage system, drinking water and electricity lines up to their project sites. [break]If the government extended these facilities, it would instantly cut developers´ cost, and hence the price of housing units, by 25 percent, said Min Man Shrestha, general secretary of Nepal Land and Housing Developers Association (NLHDA).
“Supports we have asked for are all basic facilities, and ensuring their supplies to the general public is the state´s responsibility. If the government acts sensibly, it will make well-planned housing units affordable for middle-income groups,” said Shrestha.
The developers have currenlty been providing these facilities from their side alone, and NLHDA has argued it has been raising the cost of their final products.
Likewise, the developers have also urged the government to arrange low interest rates by subsidizing the lending rates by around 4 percentage points for two target groups: first home buyers and public sector job holders.
“The ´first home buyers´ scheme will bring relief to all Nepalis who do not have their own houses,” said Shrestha. “This scheme will work for developers as well, as drop in interest rate liability will push demand upward,” he added.
The proposals that NLHDA recently submitted to the Ministry of Finance have for the first time acknowledged there is a need to cut cost of land and housing if they are to step up sales. So far, their focus has been on pressing the government to force the Nepal Rastra Bank (NRB) to end cap on realty loans, which the latter enforced in December 2010 to correct unnatural rises in their prices.
The proposal, however, implies the land and housing developers want the cost of the cut to be borne by the government, not the players who enjoyed an almost two-fold rise in land prices every six months during 2008-2010.
“Land pricing is not in our hand,” said Shrestha, volleying the case of lack of price correction to the real estate dealers. “Otherwise, we (housing developers) have already lowered the prices of housing units by as much as 20 percent and are already dealing at break even rate,” Shrestha stated.
NLHDA has also suggested to the government to waive off registration fees by 1 to 2 percent (of transaction amount) for a year in a bid to spur realty transactions, which have remained pretty low since the 2010 central bank decision.
“It will impact revenue collected from transactions; but we believe the government will not lose revenue because increased sales will raise collections from income tax and VAT,” said Shrestha.
The association has also urged the government to immediately enact regulations so that they could begin selling apartments to non-resident Nepalis (NRNs) and foreigners. The government in the budget for 2011/12 had announced opening of apartment sales to NRNs and foreigners. However, in the absence of regulations, the program has not been implemented yet.
“We have hundreds of enquiries from NRNs and foreigners. Sadly, the government´s apathy to fulfill its promises has prevented us from signing deals with them,” said Shrestha.
According to the officials, the government has already drafted the regulations and also got clearance from MoF, Ministry of Home Affairs and Ministry of Law. But the regulations have remained shelved at the Ministry of Land Reforms and Management.
If the government enacted it, developers claim they can bring in USD 300 million in the country, referring that developers currently have 3,000 apartment units ready for sale and these apartments are priced at around US$ 100,000 each.
NLHDA has also urged the government to allow transactions of land and housing only through registered brokers. They have also sought one-window facility for the registration and approval of housing projects. At present, developers have to make the rounds of seven different ministries to get their projects approved, and this normally takes about a year.
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