Lack of legal provisions sans developers to sell apartment to foreigners

Kathmandu, July 16: Foreign citizens are still unable to buy apartment in the absence of proper legal provisions.

The concerned stakeholders are pushing idea in the view of recession that gripped the housing industry following the April earthquake.

In 2011, Finance Minister Bharat Mohan Adhikari had announced through his budget speech that the foreigners would be allowed to buy apartment in Nepal.

Developers thanked the government for making a provision which could prove another milestone to boost the housing industry.

But, their happiness couldn't be materialized for another four years although there were voices from both the demand and supply sides to implement the announcement.

As the devastating earthquake in April and May last year partially damaged some of the apartments in the Kathmandu Valley, people are afraid of living in the high-rise buildings.

Apartments saw no new customers post-quake.

Dr. Ram Sharan Mahat, in his budget speech again announced that the government will facilitate the private sector in selling apartment to the foreigners.

It could have bail out some of the developers.

Yet again, there had been no progress till now.

In order to sell the apartments to the foreign citizens, a separate directives should be drafted and housing act amended.  

A snap survey conducted by the developers immediately after the earthquake showed that there were about 14,000 apartments units in the country, most of them in the Kathmandu Valley.

According to Om Rajbhandari, chairman of Urban Development Committee under the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), more than 5,000 apartment units were yet to be sold.

"If the developers were allowed to sell the apartments to the foreign citizens, it would have brought foreign capital which could have facilitated the companies to invest in newer projects. It would have contributed to attract foreign investors, too," Rajbhandari said.

None of the apartments were flattened in the earthquakes while some of them received minor damage.

Rajbhandari and other developers claimed that it had proved the apartments were safe and strong enough to resist a major earthquake.

"But, psychological factors are stopping Nepalese people from buying the apartments," they say.

According to spokesperson of the Ministry of Urban Development (MoUD) Shiva Hari Sharma, in order to sell the apartment to the foreigners, Apartment Housing Ownership Act, 1997 should be amended.

He claimed that the government did not ignore the agenda. "With the joint efforts of the Ministry of Finance, Ministry of Land Reform and Management and MoUD, a working procedure on selling apartments to the foreigners was drafted a couple of years ago."

The Ministry of Law, Justice and Parliamentary Affairs, had held discussions with the stakeholders regarding the issue.

According to the Apartment Housing Ownership Act, if anyone buys an apartment he will have joint ownership of the land where the high-rise building was constructed.

Sharma said that the prevailing laws did not allow the foreigners to buy land in Nepal.

According to the FNCCI, security concern was another factor that hampered the ownership transfer to the foreigners.

"This is serious concern. However, the government can set the ceiling for the number of apartments can be sold to the foreigners. In Thailand, the developers are allowed to sell only 50 per cent of the apartments to the foreign citizens," Rajbhandari said.

Adhikari's budget speech said that any foreigners could buy apartments of more than Rs. 200,000 USD and ownership of such apartments couldn't be transferred for five years.