Banking on the budget: Real Estate entrepreneurs have high hopes from the government

With the budget due any day now, the realty sector is also demanding its rightful share of the pie. Nepal Land and Housing Developers’ Association (NLHDA) has submitted a 13-point memorandum to the government to issue policies in the upcoming budget that will revive and boost its stagnant scenario.

Even though the budget of 2011-12 had introduced several provisions to benefit the sector, the real estate industry could not undergo any significant change in the absence of regulations to practically implement those provisions.

Minman Shrestha, general secretary of NLHDA, says, “Although the government had stipulated in the previous budget that non-resident Nepalis (NRNs) and foreigners could buy houses and apartments equivalent to USD 200,000 and more, the provision was not implemented due to lack of regulations.” The Ministry of Land Reform and Management and Nepal Securities Board were responsible for drafting necessary guidelines for this within midOctober 2011, but it has not been prepared till date.

“Since previous provisions were not put into effect, we are pressing the government to introduce regulations as soon as possible,” maintains Minman. He further says, “Besides that, we have suggested that the government secure provisions for easy and subsidised loans to first home buyers and national servants, bureaucrats, and government officials. Deduction of income tax in EMIs would also be of great help.“

Adding that the government needs to focus on midand low-income groups who want to genuinely own property, he says, “As a shelter is every citizen's basic need, the government should undertake its responsibility. Providing subsidised loans will help in will help in creating a dynamic realty sector.“

Buddhi Narayan Shrestha, president of International Real Estate Federation (FIABCI) Nepal Chapter, also expresses his hopes for the upcoming budget.He says, “I personally feel that the provisions that were on paper in the last fiscal will be practically implemented this year.“ His expectations from the budget are declaration of zoning in association with land use policy, developers getting land filling amount above 25 ropanies and income disclosure provision on land and housing purchases threshold of more than Rs 10 million.

According to Buddhi, the government should minimise land transaction fee and waive off the transaction fee by 35 per cent to encourage women for owning property.

“During land transaction, the government section will conduct minimum evaluation but as the present market price has dipped, the prime location valuation should be increased. The budget is for the benefit of general public, hence custom tax reduction in housing materials and equipments will decrease the cost of houses and apartments,“ he opines. He further adds, “NRB has tightened the loan lending money by BFIs, which should be loosened up to 70 per cent to offer relief to developers and increase investment.“

nforming that real estate has been defined as a ‘service industry’, Minman stresses, “Depriving the sector of its ‘industry status’ prevents it from availing several facilities.

Hence, it is necessary to deem it as an industry for its overall development.” Stating that the government just dangles bait in each budget, Prakash Bajracharya, managing director of Shangrila Housing Pvt Ltd, says, “We hope that this year won’t be the same as previous years.

I believe that in this budget, housing laws as well as NRB rules and regulations will be corrected in the industry’s favour.” As the whole world is going through recession, he also sees the need to reduce custom duty on raw materials and construction equipments to make housing more affordable.

Stating that government provisions and promotional work is in a state of conflict, Bajracharya says, “The decision to allow foreign investment worth USD 200,000 and promoting low-end housing apartments targeted at lowand midincome group are two separate issues, which are confusing developers in matters of investment and construction. The government should mention separate and clear provisions and promote them equally.” Most stakeholders believe that the budget is bound to improve the current scenario.

They stress on the need to decrease interest rates of BFIs, simplify the loan process, retain manpower, and focus on housing as a basic need.

Source:thehimalayantimes

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