Land subdivision has been suspended in 363 local levels after they failed to complete mandatory land classification, reversing a temporary relaxation granted under amended land use regulations.

The federal government had amended the Land Use Regulations, 2022, for the third time, allowing municipalities and rural municipalities that had not classified land to continue approving land subdivisions for a limited period. However, the deadline expired without most local levels having completed the process, prompting a suspension starting mid-July, the beginning of the new fiscal year.

According to the Ministry of Land Management, Co-operatives, Federal Affairs and General Administration, only 390 of Nepal’s 753 local levels have completed land classification.

Under the Land Use Act, 2019, local levels are required to classify land into ten categories, including agricultural, residential, industrial, commercial, forest, mining and mineral areas, based on maps and technical data provided by the federal government. Local Land Use Councils are responsible for implementing the classification and enforcing land use policies.

Since the Land Use Act and its accompanying regulations came into force, land subdivision has been prohibited in local levels that have not completed classification. However, the suspension applies only to subdivision-related transactions. Other land transactions, including the transfer of entire land parcels, inheritance, partition among family members, court-ordered transfers and record cancellation, will continue, said Ganesh Bhatta, spokesperson for the ministry.

This is the third time land subdivision has been halted because of delays in classification.

In 2025, subdivision was suspended in 500 local levels after only 253 had completed full land classification. Earlier, in September 2024, land administration services, including subdivision, were disrupted in 620 local levels, with only 133 having completed the process.

When the regulations were first introduced in May 2022, local levels were given six months to identify and demarcate agricultural land by defining its boundaries. By the November 2022 deadline, only a handful had done so.

Local levels were then required to classify all land into the ten prescribed categories. After widespread non-compliance, the government amended the regulations in August 2023, extending the deadline by one year for municipalities to complete agricultural land demarcation.

The first amendment also eased subdivision rules. It allowed residential and commercial land to be divided into plots as small as 80 square metres and agricultural land into parcels of up to 508.74 square metres. 

Previously, residential land could not be divided into plots smaller than 130 square metres. Agricultural land subdivision was also subject to minimum plot sizes of 500 square metres in the Kathmandu Valley and 675 square metres in the Tarai and Inner Madhesh.

The regulations prescribe separate standards for agricultural, residential and commercial land once classification is completed. Commercial housing developments, for example, must meet local road access standards.

Even after the first extension, many municipalities failed to complete the work, forcing the government to amend the regulations again in September 2024.

The third amendment extended the deadline until mid-July 2026 for local levels to complete the demarcation of agricultural land.

According to the ministry, 176 local levels have prepared parcel-level land records, 130 have developed classification criteria and updated maps, 61 have completed only the classification criteria, eight have identified only agricultural land, while 38 have not begun the process at all.

The Ministry of Law had advised against further amendments when the Land Ministry revised the regulations for a second time. Despite that, the government proceeded with another extension.

“So far, only 390 local levels have completed land classification,” Bhatta said. “There has been no discussion yet on whether the regulations will be amended again to provide additional time. Thirty-eight local levels have not even started the process, while the rest are at different stages of implementation.”

Local levels argue that the exercise is costly and that they have received little financial support from the federal or provincial governments.

Bhim Prasad Dhungana, president of the Municipal Association of Nepal, said land classification costs at least Rs1.5 million to Rs2 million for each local level.

“The process requires technical guidelines, mapping and skilled personnel. It is expensive,” he said. “Many municipalities simply do not have the budget, which is one reason the work has not been completed.”

He also cited a shortage of technical manpower.

“The federal government says it will provide technical staff when requested, but that rarely happens. We have to hire experts using our own limited resources,” Dhungana said.

The government began implementing nationwide land classification after issuing the Land Use Regulations on May 23, 2022, three years after the Land Use Act was enacted.

Nepal’s 62nd Auditor General’s Report has also urged the government to complete land classification across all local levels, saying it is essential for bringing greater order and transparency to land subdivision and administration.

“To make land subdivision more systematic and practical, all local levels should be equipped with adequate resources, and coordination should be strengthened to classify land using the land use map database transferred by the Department of Survey,” the report states.