Staying Compliant: Essential Updates for Nepalese Landlords & Foreign Hosts in Nepal

Staying Compliant: Essential Updates for Nepalese Landlords & Foreign Hosts in Nepal 🏡

Renting out property in Nepal—whether long-term or as Airbnb-style stays—comes with specific legal, tax, and compliance responsibilities. Here's what you need to know to stay on the right side of the law:

1. 📄 Use a Formal Lease Agreement

Nepali law mandates written agreements when monthly rent exceeds NPR 20,000; for commercial leases, agreements can extend beyond five years. A compliant lease should include:

• Full details of landlord & tenant (including citizenship/passport/visa)

• Property address, term, purpose, rent, deposit, and payment terms

• Utility responsibilities, maintenance duties, and eviction clauses

• Witness signatures

• Registered with the Land Revenue Office if over 11 months

2. 💰 Register & File Rental Income Tax

Landlords must register rental income with the Inland Revenue Department and file it annually by mid-July (31 Shrawan). Tax rates are:

• 10% up to NPR 200k

• 15% NPR 200k–500k

• 20% NPR 500k–1M

• 25% above NPR 1M

• A 10% standard deduction applies before taxation.

📘 Additional compliance:

• House rent tax collected by wards, with penalties for late payment up to NPR 50,000 expertsewa.com.

• Document and file tax properly to avoid fines.

3. ⚖️ Understand Lease Laws & Tenant Rights

Under Civil Code and Tenancy Act:

• Lease term shouldn’t exceed five years unless commercial

• Owners must allow peaceful use, utilities, and habitability.

• Tenants can’t be evicted without 35 days’ written notice

4. 🔑 Foreign Hosts & Airbnb Compliance

For foreigners hosting on Airbnb:

• You must have a valid visa and respect immigration terms.

• Foreigners cannot own property in Nepal—must lease or manage via a Nepali-registered company or joint venture

• Guests should provide ID at check-in (passport or citizenship) for security and compliance .

• Be aware that hosting short-term guests may require extra registration with ward or municipal authorities, similar to hotel protocols.

5. 🧾 Keep Records & Maintain Transparency

• Save copies of all agreements, rent receipts, tax filings, depreciation claims.

• Depreciation on buildings may reduce taxable income—buildings depreciate over ~20 years, using straight-line method.

• If tenants sublease, sub-rental income is taxable and must comply with the original lease.

6. 🛠 Practical Tips from Landlords

• Tenants may leave mess or damage—include repainting/repair clauses.

• Limit water/electricity misuse—deduct or install MCB clauses in agreements.

• Screening tenants via background checks, requiring local IDs, and preferring those with stable residency reduces risk.

✅ Final Takeaways

1. Formalize leases, register as needed, and include clear lease terms.

2. Declare and file taxes—understand applicable rates, deductions, and penalties.

3. Respect tenant rights: fair notice, services, and safety.

4. Foreign hosts must use proper channels—leases, visas, and municipal registrations.

5. Track records and paperwork diligently.

6. Use practical precautionary clauses based on real landlord experiences.

With clear agreements, proper registrations, and transparent tax filings, landlords—domestic or foreign—can confidently and legally rent or host guests in Nepal. Want help drafting a lease template or a checklist of documents? I'm happy to help!