(Land Revenue (Eighth Amendment) Regulations, 2082)
A mandatory licensing provision has been implemented for those engaged in house and land transactions. Under the eighth amendment to the Land Revenue Regulations, the licensing system for Real Estate Transactions in Nepal has been formally established through the Nepal Gazette, Volume 75, No. 27, dated Bhadra 12, 2082 BS, published by the Government of Nepal. These provisions are based on Section 26A and Section 26B of the Act and further detailed under Rules 23J and 23K of the Land Revenue Rules.
Application for License (Rule 23J, Section 26A of the Act)
According to Rule 23J, any natural or legal person who wishes to engage in Real Estate Transactions must first obtain a license. For this, an application has to be submitted in the format prescribed under Schedule-8, along with all necessary details.
The authority responsible for receiving and deciding on such applications has been designated by the Government of Nepal as required by Section 26B(1) of the Act. Once an application is received, the authority conducts a necessary inquiry. If satisfied with the applicant’s qualifications and financial credibility, the authority may grant the license in the format given under Schedule-9.
This process ensures that only credible and qualified individuals or institutions are permitted to operate in the real estate sector.
Provisions Relating to Fees, Renewal, and Operation of Real Estate Transactions:
The licensing, renewal, and operational provisions governing Real Estate Transactions in Nepal are prescribed under Section 26A and Section 26B of the Act, and elaborated under Rule 23J, Rule 23K, and Rule 23A of the Land Revenue Regulation.
1. License Fee (Rule 23K, pursuant to Section 26A of the Act)
Rule 23K prescribes the amount of fees to be paid by persons seeking to obtain a license for conducting real estate transactions. The prescribed fee structure is as follows:
- Clause (a): NPR 500,000 for a licensee who engages in transactions up to fifty million rupees at a time.
- Clause (b): NPR 1,000,000 for a licensee who engages in transactions exceeding fifty million rupees at a time.
This distinction ensures that larger real estate operators, handling higher-value transactions, contribute proportionately greater fees to the regulatory framework.
2. Renewal of License (Rule 23K(2)–(4), pursuant to Section 26B of the Act)
A license issued under Section 26A is not perpetual; it must be renewed periodically in compliance with Rule 23K.
- Timeframe for Renewal:
- A licensee must submit an application for renewal to the licensing authority at least thirty-five (35) days before the expiry of the license period.
- Renewal Fee:
- NPR 400,000 in the case of a licensee falling under Rule 23K(1)(a) (transactions up to fifty million rupees).
- NPR 800,000 in the case of a licensee falling under Rule 23K(1)(b) (transactions exceeding fifty million rupees).
- Documents Required for Renewal:
Along with the renewal application and fee, the licensee must submit the following documents:- Details of the transactions of the company or firm.
- Audit report of the company or firm for the previous financial year.
- Copy of the tax payment certificate of the company or firm for the previous financial year.
- Late Renewal Provision:
If the licensee fails to apply for renewal within the stipulated period, the license may still be renewed within ninety (90) days from the date of expiry, provided that the licensee pays an additional late fee of NPR 50,000 along with the renewal fee.
- Inquiry and Renewal by Authority:
As per Rule 23K(4), upon receipt of an application for renewal under sub-rule (2) or (3), the licensing authority shall conduct necessary inquiries into the application and, if satisfied, renew the license.
This multi-layered provision ensures that real estate licensees maintain regular compliance, submit audited financials, and remain up to date with their tax obligations.
3. Transactions Through the Geo-Information System (Rule 23A, linked with Section 26A of the Act)
In addition to licensing and renewal, the law has made it mandatory to use modern technology in real estate transactions.
- As per Rule 23A, every licensee conducting real estate transactions pursuant to Section 26A of the Act must operate a Land Service Center and carry out real estate transactions through the Geo-Information System (GIS).
- However, the law also provides an alternative. If a licensee does not wish to operate his or her own Land Service Center, such licensee may conduct real estate transactions through the Geo-Information System from a Land Service Center operated by another licensee.
This provision demonstrates the government’s effort to digitize real estate transactions, increase transparency, and prevent fraudulent practices.
Legal Significance:
These provisions signify their legal enforceability and formal recognition. By requiring substantial fees, periodic renewal, and submission of audit and tax documents, the law seeks to:
- Promote transparency and accountability in real estate business.
- Prevent money laundering and illegal real estate practices.
- Ensure government revenue through license and renewal fees.
- Safeguard consumers by ensuring that only compliant entities can operate legally.
Thus, the Gazette notification not only operationalizes the licensing system but also strengthens the overall governance of the real estate sector in Nepal.
Conclusion:
A provision has been implemented requiring individuals engaging in real estate transactions to obtain a mandatory license. Through the eighth amendment of the Land Revenue Regulations, it has been stipulated that the license, valid for a period of up to five years, will require a fee of up to NPR 1 million.
In 2080 BS, some acts related to the Prevention of Money Laundering and Promotion of Business Environment were amended, and the Property Act was amended to require a license for engaging in real estate transactions. Individuals who assist or provide consultation in the purchase and sale of real estate, other than direct personal agreements (Real Estate Brokers), are required to obtain a license. The amendment to the Land Revenue Regulations was published in the Gazette and has now come into effect.