Government Revises Real Estate Transaction Rules: Mandatory Bank Statement Requirement Dropped, New Threshold Set for Reporting to Nepal Rastra Bank

The government has amended several key provisions related to real estate transactions, reversing an earlier directive that had introduced strict banking and reporting requirements. The changes follow widespread concerns over privacy, administrative burden, and potential disruptions in property dealings.

Previously, land revenue offices were required to report details of both the buyer and seller to Nepal Rastra Bank (NRB) if an individual purchased or sold properties worth Rs. 3 crore or more in a single day or through multiple transactions. That threshold has now been significantly lowered. As per the revised directive, transactions exceeding Rs. 1 crore must be reported to NRB.

Additionally, the rule requiring buyers to submit proof of payment from their bank account to the seller’s account—if the advance agreement (bainapatra) certified by the local authority was submitted for transactions above Rs. 10 lakhs—has also been withdrawn. This provision had previously mandated banking or electronic transfer details as part of the documentation.

Another key change involves the removal of a separate schedule that listed high-ranking individuals, likely intended for closer scrutiny under anti-money laundering regulations.

These directives were initially introduced by the Department of Land Management and Archive on May 27 (Jestha 14), following instructions from the government to help Nepal comply with the Financial Action Task Force (FATF) recommendations. The move was aimed at removing Nepal from the FATF's "grey list" by strengthening measures against money laundering and the financing of terrorism.

However, the strict rules were met with strong pushback. Land revenue offices across the country expressed dissatisfaction, noting that the additional documentation had increased inconvenience for service seekers. Land administration officers had also warned that real estate transactions could decline by up to 25% due to the new burdens.

In response to this feedback, and after consultations involving the Prime Minister’s Office, the Department of Land Management has now revised the directive. The updated guidelines still emphasize transparency and promote banking transactions but allow more flexibility and reduce mandatory requirements.

The revised directive also introduces flexibility in tax payments for transactions above Rs. 10 lakhs. Earlier, it was mandatory for the buyer to pay registration fees directly from their bank account and for the seller to pay capital gains tax from theirs. Now, either party can choose the payment method according to their convenience.

The Department has formally communicated the updated instructions to all land revenue offices across the country. These changes are expected to strike a balance between controlling illicit financial activities and ensuring smoother property transactions for the public.