The government is preparing to introduce a legal system which will require land to be bought and sold in the same manner as shares are traded in the secondary market in a bid to ensure that transactions are above board.
The Ministry of Land Reforms and Management said that a transparent land transaction system would help reduce anomalies in the real estate market besides boosting revenue for the government.
A draft Land Market Policy and Act which is being prepared by two consultants hired by the ministry will contain a provision regarding land transactions through the formal market and registered land brokers, the ministry said.
Secretary at the Ministry of Land Reforms Lok Darsan Regmi said that all the land would be listed in a land market and transactions would be conducted by registered brokers.
“The brokers will receive requests for purchase or sale of land from buyers and sellers, and they will match such requests and conduct transactions like in the share market,” said Regmi. “Land transactions conducted through this system will be transparent as people will have to divulge the actual amount of money that has changed hands and the government will earn more revenue from the transactions and the broker.”
Currently, there is a practice of showing a lower value of the land traded in order to minimize taxes. Since the brokers operate informally, the commission they charge is also not disclosed to the government and this allows them to remain outside the tax bracket.
As the government is all set to maintain online land records, conducting land transactions through the formal market system won’t be difficult, according to Regmi. The ministry has moved to formulate the required policy and law so that all land transactions will be above board. “The consultants working on the policy and act have been given until the end of the fiscal year to produce an initial draft,” said
Regmi. The government has embarked a budget of Rs700,000 to prepare the draft.
On Sunday, Regmi informed the parliamentary Committee on Agriculture and Water Resources about the government’s plan, explaining that it was part of the ministry’s reform initiative and that implementing it would lead to a substantial increase in government revenue.
Other proposals include arranging online service by the Survey Department, preparing land use action plans and introducing a legal mechanism on common valuation of land, restructuring the government organization related to land and maintaining details of the government’s lands, among others.
Presently, different methods of land valuation are used for land transactions, land acquisition and bank credit, and the government has taken the initiative to introduce a single system for all purposes.