Nepal is changing. With the formation of a new, strong cabinet, the country is entering a fresh phase of policy reform, infrastructure investment, banking expansion and accelerating urban growth. Ministers have spoken of modernising public services, attracting foreign capital and building the foundations of a prosperous nation. Yet amid this momentum, one critical sector continues to operate in near-total regulatory darkness, a sector that quietly underpins every bank loan, every land deal, every infrastructure project and every insurance claim in the country: property valuation.
I have spent years in the field as a professional valuer. What I have witnessed is not merely a gap in policy, it is a structural vulnerability that exposes Nepal’s entire financial architecture to systemic risk. I have catalogued seventeen major failings in Nepal’s current valuation framework and issued a ten-point reform agenda directed at the incoming government.
The analysis has drawn significant attention from banking professionals, urban planners and policy experts across the country.
A profession without a rulebook
The most fundamental problem, Bhattarai argues, is deceptively simple: Nepal has no Valuation Act. Unlike most developed and many developing economies, there is no legislation governing who may call themselves a property valuer, how they must practise or what standards they must uphold. The profession is entirely unregulated.
This absence of legal framework produces a cascade of dysfunction. Banks continue to rely on the antiquated 70:30 valuation method, a blunt instrument that fails to reflect actual market dynamics. The same piece of land or property will carry entirely different values depending on the context: one figure for a mortgage, another for taxation, a third for government compulsory acquisition, a fourth for insurance and yet another if the property is to be sold under forced-sale conditions.
This multiplicity of values for the same asset is not a technicality. It creates real-world consequences: borrowers are misled, lenders are exposed and the state loses revenue it is legally owed.
Nepal’s valuation sector currently faces a complex web of structural, ethical, and technical challenges that the government must urgently address. At the foundational level, the industry suffers from a total lack of legislative oversight; there is no Valuation Act to govern the profession, leaving it entirely unregulated without national licensing examinations or mandatory continuing professional development.
This legislative vacuum is mirrored in the technical sphere, where the absence of a national property transaction database or automated digital data systems forces banks to rely on the outdated 70:30 valuation approach. Furthermore, the lack of professional liability or indemnity insurance leaves both practitioners and the broader financial system exposed to significant risk.
The integrity of the market is further compromised by inconsistent standards and external pressures. Currently, the same property often carries different values depending on the purpose, while government-mandated ‘minimum land values’ and compulsory acquisition compensations frequently sit well below actual market prices, leading to reduced tax revenue and public dissatisfaction. Within the mortgage sector, the routine application of forced sale values over true market values—combined with unhealthy fee competition and the absence of minimum fee guidelines—erodes professional standards.
These systemic weaknesses are often exploited, with lenders and borrowers pressuring valuers to match desired loan amounts, alongside persistent commission practices and political interference. Ultimately, this culture of overvaluation and distorted compensation not only elevates banking risk but also contributes directly to the rise of non-performing assets across the country.
The banking system’s hidden exposure
Perhaps the most alarming dimension of my analysis concerns Nepal’s banks. Property valuation is the cornerstone of collateral-based lending which accounts for a vast majority of credit extended in Nepal. When valuations are inflated, banks extend loans against assets that cannot support them. When borrowers default, the forced-sale recovery falls short, leaving lenders nursing losses and contributing to the country’s already-elevated level of non-performing assets.
The problem is compounded by what Bhattarai describes as an informal culture of influence: some banks and borrowers apply pressure on valuers to produce figures that support the loan amount requested, rather than reflecting genuine market conditions. Without professional regulation, without the threat of licence revocation or professional sanction, individual valuers have little institutional protection against such pressure.
There is also no national database of actual property transactions. Without transparent, verified sales data, valuers are forced to rely on estimates, hearsay or out-of-date benchmarks. This informational vacuum makes accurate, independent valuation structurally difficult even for those who wish to practise with integrity.
To address these systemic challenges, a comprehensive ten-point agenda for reform is proposed to modernize Nepal’s valuation sector. The cornerstone of this initiative is the introduction of a Valuation Act of Nepal, which would provide the necessary legal framework to establish a Valuation Council or Regulatory Authority. This body would be responsible for making value licensing mandatory, ensuring no individual practices without proven competence. To bring local practices up to global benchmarks, the agenda calls for the implementation of Nepal Valuation Standards aligned with the International Valuation Standards (IVS).
Furthermore, to eliminate the current ‘race to the bottom’ regarding quality, the government should establish minimum valuation fee guidelines and introduce professional indemnity insurance to protect clients and ensure financial accountability.
In addition to regulatory shifts, the agenda emphasizes a technological and data-driven overhaul of the financial system. This includes developing a National Property Transaction Database to create a transparent record of actual sales and modernizing the mortgage system by replacing the outdated 70:30 method with market-reflective approaches. To support human expertise and reduce errors, the plan advocates for the development of Automated Valuation Models (AVM) and the creation of a Central Valuation Record System for banks.
These digital tools allow financial institutions to systematically identify inconsistencies and overvaluations, ultimately stabilizing the economy and restoring professional integrity to the field.
‘Reform is not optional’
If Nepal is genuinely committed to sustainable economic growth, to attracting foreign investment, to expanding its banking sector and to building world-class infrastructure, then property valuation reform is not a peripheral concern, it is a prerequisite. The valuation sector sits quietly behind banking, taxation, compensation, insurance and development projects. If valuation is wrong, the entire financial system can be affected. It is time Nepal formally recognised, regulated and modernised the valuation profession.
The timing of intervention coinciding with the formation of a new cabinet and a renewed national conversation about institutional reform has lent it a particular urgency. Whether policymakers will heed the call remains to be seen. But the case is difficult to dismiss.
