Land Transactions Decline Amid Plot Classification Halt in 500 Municipalities

Land and property transactions across Nepal have slowed significantly since the start of the new fiscal year 2025/26 (Shrawan 2082), mainly due to stalled plot classification in 500 municipalities. According to the Department of Land Management and Records, revenue from land transactions in the first month of the fiscal year dropped to NPR 3.28 billion, compared to NPR 3.83 billion in the same period last year.

Despite expectations that the new budget and monetary policy would stimulate the market, real estate businesses reported no significant positive impact.

Off-Season and Policy Delays Hit Market

Traditionally, the months of Jestha and Ashadh (May–July) are considered the off-season for land trading, while Shrawan (mid-July–mid-August) marks the start of new financial activities. However, Bishnu Ghimire, President of the Nepal Land and Housing Developers’ Association, said the market did not pick up this year as expected due to the ongoing halt in plot classification.

“Land transactions were expected to rise with the start of the new fiscal year and the flow of fresh loans, but the stalled plot classification disrupted the market,” Ghimire said.

500 Municipalities Yet to Complete Classification

The Ministry of Land Management, Cooperatives and Poverty Alleviation stated that only 253 municipalities have completed the classification process, while 500 are still in various stages. Officials claim the halt affects only these 500 municipalities, but stakeholders argue that the impact is nationwide.

During Shrawan alone, 16,431 plot division documents were processed, but most of them were pre-approved before the halt, according to Ghimire. “Had the classification not been stalled earlier, even this NPR 3.28 billion revenue would not have been collected,” he added.

Previous Attempts to Resolve the Issue

The government has already amended the Land Use Regulation, 2079 (2022), twice to open plot division and instructed municipalities to complete land classification by Asar 2082 (mid-July 2025). However, many municipalities failed to meet the deadline, leading to a halt on plot division activities in 620 municipalities since August 2024 (Bhadra 2081). At that time, only 133 municipalities had completed full classification.

A third amendment to the regulation is now under discussion, according to Ganesh Bhatt, spokesperson for the Ministry of Land Management. “Until the classification is finalized, property division, inheritance allocation, and related land services are affected,” Bhatt said.

Revenue and Loan Flow Impact

In Ashadh (mid-June–mid-July 2025), there were 154,720 land transactions generating NPR 6.55 billion in revenue, far higher than the first month of this fiscal year. Personal housing loans grew by 7.9% in fiscal year 2024/25, adding NPR 305.49 billion, while overall land loans increased by only 3%, down from NPR 38.89 billion in 2023/24 to NPR 7.83 billion last year, according to Nepal Rastra Bank.

Classification Challenges and Revisions

Initially, the Land Use Regulation required municipalities to designate agricultural land within six months of its enactment in May 2022 (Jestha 2079). The regulation was later amended to allow up to one year for this process and to reduce the minimum plot size for residential and commercial purposes to 80 sq.m. and agricultural land to one ropani.

Despite multiple extensions, municipalities have failed to classify lands into the 10 designated categories: agricultural, residential, commercial, industrial, forest, mining, and others.

What’s Next?

With the government still debating the third amendment and legal experts questioning its feasibility, the fate of land transactions in over 500 municipalities remains uncertain. The Ministry of Land Management continues to push for policy adjustments, but delays have already led to revenue losses and stagnation in the real estate market.