According to Department of Land Reforms and Management (DoLRM), transactions have plummeted sharply in four of the five land revenue offices (LROs) in the Valley. As a result, revenue from the sector went down by more than Rs 100 million, compared to what the government mobilized in the same period last year. [break]
Land and housing dealers attributed the drop in business to seasonal impact, arguing that transactions always drop during rainy and festive season. However, concerned LRO officials attributed it to tighter lending policy of the banks and financial institutions and imposition of new taxes in the sector.
“Tight lending policy and new taxes have largely kept a large number of buyers psychologically away from the market,” said Raju Basnet, a DoLRM official. He told myrepublica.com that the slowed transaction has caused the overheated realty prices to stagnate, except in a few residential sites such as Pepsi Town Planning, Maharajgunj, Manamaiju and areas at core of the city.
According to the DoLRM, cumulative revenue collections from realty transactions at the five LROs in the Valley stood at Rs 564 million for the period, which is a 15 percent decline over what they collected in the same period last year. "And the point to note is that the drop was recorded despite the LROs raising the valuation of land by an average of 20 percent in the Valley in mid-July,” Basnet added.
Revenue collections of Dillibazaar LRO, the largest revenue generating LRO in the Valley, dropped almost to a half to Rs 144 million during the period. Only the Kalanki LRO showed no sign of slowdown during the period.
People keeping track of the realty market informed myrepublica.com that the slowdown has not come suddenly but had started creeping in the sector from May this year. “Slowdown started after the central bank instructed the banks and financial institution to refrain from issuing fresh loans in the sector, referring that property´s value was rising unnaturally and could go down sharply,” said a property dealer.
It further deepened after the government imposed capital gains tax (CGT) on realty deals worth Rs 5 million and above and value added tax on housing and apartments´ constructions from this fiscal year.
Given the situation, experts stated that the future of realty market will depend on how the banks will shape their lending and recovery policy. “If they continued to control loans and launch recovery drive, chances of market taking a further dip are high,” the dealer said.
milan@myrepublica.com
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