Can Foreigners Buy Property After Incorporating in Nepal?

Foreign companies exploring investment opportunities in Nepal often ask: Can foreigners buy property after incorporating in Nepal? With the rise in foreign interest in infrastructure, hospitality, agriculture, and real estate development, understanding the legal limitations on land ownership is critical.

While company incorporation in Nepal opens doors to doing business, the rules around property ownership are more nuanced, especially for non-citizens. This article breaks down the legal landscape, policy restrictions, and indirect options available to foreign entities interested in acquiring or using property after incorporating in Nepal.

General Law: Can Foreigners Directly Own Property in Nepal?

The short answer is no—foreign individuals and companies are currently not allowed to directly own land or real estate in Nepal. This restriction is enforced under the Land Act and Foreign Investment and Technology Transfer Act (FITTA).

According to these laws:

• Foreigners cannot register land or property under their name.

• Even after company incorporation in Nepal, foreign-owned companies do not automatically gain land ownership rights unless explicitly permitted for specific projects or sectors.

Exceptions and Conditional Permissions

While direct property ownership is prohibited, there are exceptions and workarounds available to foreign companies depending on their industry and investment structure.

1. Land Leasing for Project Purposes

Foreign companies can lease land for up to 50 years (extendable by 25 more years) under certain conditions:

• The lease must be linked to an approved business project under FITTA.

• Common in sectors such as manufacturing, agriculture, tourism, and energy.

• Requires prior approval from the Department of Industry (DOI) or Investment Board Nepal (IBN).

Implication: Though not ownership, long-term lease agreements provide legal possession for operational use.

2. Special Government Permissions

In rare cases, the government can grant approval for land use or acquisition for large-scale, nationally significant projects. These are often:

• Hydropower, infrastructure, SEZ developments

• Projects under Public-Private Partnership (PPP) arrangements

• Negotiated on a case-by-case basis

Note: This route requires high-level lobbying and justification.

3. Partnership with a Nepali Citizen or Company

Some foreign investors opt to:

• Form joint ventures with Nepali partners where the local partner holds land

• Register a Nepal-based company with majority Nepali ownership to bypass restrictions

While legally feasible, this structure requires caution, due diligence, and clear contractual agreements to protect the foreign investor’s rights.

Impact of Company Incorporation in Nepal

Company incorporation in Nepal does not override land ownership restrictions. Even if your foreign company is:

• Registered under the Companies Act

• Approved under FITTA

• Paying taxes and employing locals

… it still cannot directly register property under its name unless the project qualifies for leased land or special government approval.

This applies to:

• Buying commercial real estate

• Purchasing residential property

• Acquiring agricultural or forest land

However, incorporated foreign companies can:

• Lease office or industrial space

• Enter into build-operate-transfer (BOT) or build-own-operate (BOO) agreements

• Use land as part of approved projects in designated industrial or economic zones

Real Estate for Business Use: What’s Allowed?

Legal Risks and Considerations

1. Nominee Ownership Risks: Having Nepali citizens hold property on behalf of foreign investors can create legal and financial vulnerability. This practice is not formally protected under law.

2. Changing Policies: Nepal has been reviewing land ownership policies for FDI. Investors should keep updated with evolving regulations.

3. Local Government Approval: Even with FITTA clearance, local municipalities may impose additional restrictions.

Strategic Alternatives for Foreign Companies

If your business model requires physical premises or land, consider these options:

• Long-term leases with legal agreements registered at the Land Revenue Office

• Build-Operate-Lease-Transfer (BOLT) models for infrastructure projects

• Co-investment models with reliable local partners

• Use of Special Economic Zones (SEZs) where land-use rights are more flexible for foreign investors

Conclusion

While company incorporation in Nepal grants a legal presence and the right to conduct business, it does not automatically enable foreign land ownership. However, viable alternatives like long-term leasing, joint ventures, and SEZ-based operations can provide the functional benefits of property use.

Foreign companies are encouraged to consult with local legal and accounting experts to structure investments that align with both Nepali law and their long-term business goals.