Nepal Moves to Dismantle Informal Brokerage System in Real Estate Sector

Department of Land Management and Archives has announced a major reform in Nepal’s real estate sector, aiming to end the long-standing dominance of informal brokers and middlemen. The department has decided to shift high-value property transactions in metropolitan and sub-metropolitan areas to a fully company-based system, marking one of the most significant regulatory changes in decades.

Under the new policy, only licensed real estate companies will be allowed to facilitate property transactions in major urban centers. The department has so far authorized 36 companies to operate under this framework. According to Director Hari Prasad Pant, the system will become mandatory from Falgun 25, making company-based transactions a legal requirement rather than an option.

To ensure uniform implementation, the department has issued official circulars to major land revenue and land reform offices, including those in Dillibazar, Lagankhel, Biratnagar, Birgunj, Janakpur, Nepalgunj, Pokhara, and Butwal. The directive states that property transactions worth more than NPR 30 million in metropolitan and sub-metropolitan areas must now be conducted only through licensed companies.

With this move, informal intermediaries who previously dominated transactions between individuals and companies are expected to be pushed out of the system. The regulation has been introduced in line with provisions of the Land Revenue Act, 2034, which requires formal authorization for real estate brokerage activities. The decision is also based on a government notice published in the Nepal Gazette last Ashwin.

For decades, Nepal’s property market has been widely regarded as being controlled by unregistered brokers. These middlemen influenced pricing, documentation, customer matching, and financial settlements, often operating outside formal regulatory frameworks. This environment created widespread problems, including price manipulation, fake documents, fraud, and tax evasion.

According to Director Pant, the new system is designed to curb such irregularities and integrate real estate transactions into the formal economy. “Our objective is to bring transparency, accountability, and legal discipline into the sector,” he said. Out of nearly 200 applicants, only 36 companies have met the required standards so far, reflecting the government’s strict licensing criteria.

However, some applicants and investors have expressed dissatisfaction. One investor from an unsuccessful applicant company claimed that the strict standards could encourage cartelization. “It seems like only a few companies are being favored, which may limit competition and create syndicates,” he said.

Licensed firms include companies such as Himalayan Realtors, Continental Real Estate, Nandi Real Estate, Omega Capital Advisors, Metro Link Properties, Sampatti Real Estate, and Gharjagga Sewa, among others. These firms now hold exclusive authority to manage high-value transactions in major cities.

The regulation also includes strict penalties for unauthorized brokerage activities. Anyone found conducting real estate transactions without a license may face fines of up to NPR 2.5 million and imprisonment for up to six months. This provision is expected to place thousands of informal brokers at legal risk and fundamentally alter the traditional structure of the market.

Market analysts believe the policy may have short-term negative effects on transaction volumes. As informal deals are suddenly halted, and both buyers and sellers adjust to the new procedures, market activity could slow down temporarily. This concern is particularly relevant in the Kathmandu Valley, where real estate trading has already been sluggish due to banking restrictions, land fragmentation bans, and broader economic slowdown.

Consumers may also face initial difficulties in navigating the new system. Additional service fees charged by licensed companies could increase transaction costs, while unfamiliar procedures may cause delays. These factors could discourage some buyers and sellers in the early phase of implementation.

In the long run, however, experts see the reform as a positive step toward building a transparent and reliable property market. With all transactions formally recorded, tax compliance is expected to improve, fraud cases may decline, and investor confidence could strengthen. The system is also likely to enhance coordination with banks and financial institutions, making property transactions more compatible with formal financing.

The success of the reform will largely depend on the role of local governments. Metropolitan and sub-metropolitan authorities are expected to monitor illegal activities, enforce regulations, and raise public awareness. However, questions remain about whether local bodies have sufficient manpower, technical capacity, and resources to carry out effective supervision.

Another major concern is market concentration. With only 36 licensed companies, competition may remain limited, potentially leading to higher service charges and reduced consumer choice. Analysts warn that eliminating informal brokers could unintentionally create a new form of institutional monopoly if regulatory oversight is weak.

In the short term, the market is likely to experience slower activity as informal players exit and stakeholders adapt to the new system. Given the already fragile condition of the real estate sector, additional pressure cannot be ruled out.

Over the long term, however, bringing property transactions into a formal framework is expected to increase government revenue, improve governance, and attract institutional and foreign investors. If implemented effectively, the policy could mark a turning point in Nepal’s real estate sector—transforming it from an opaque, broker-driven market into a regulated and investor-friendly industry.