How many flats does it take to retire on rent in Kathmandu? The honest yield math

A landlord in Chabahil laid it out over tea. Two flats let, Rs 27,000 and Rs 25,000 a month, both in a building he finished in 2019. He wanted to know how many more he needed before he could stop working. He had done the sum the way most people do it, dividing annual rent by what the construction cost, and got something close to 5%.

The number he had not subtracted was everything.

The yield nobody publishes

Start with the awkward part: Nepal has no official property price data and no rent survey. Global Property Guide does not cover the country. What exists is listing asks on portals, which are what sellers hope for rather than what changes hands.

So here is the calculation done transparently, pairing apartment asking prices against apartment asking rents in the same area from the same portals. The gross yield column is my arithmetic on those two asks:

Two patterns worth reading off that table. Apartment bought and let as an apartment lands between 2.3% and 4.2%. Buy an apartment and let it as an ordinary flat, at the going rate for a floor of somebody's house, and you drop to somewhere between 1.2% and 2.9%, because a 2BHK house-floor flat in Kathmandu rents around a Rs 25,000 median while the same footprint in a managed complex fetches two or three times that.

The independent cross-check agrees with the low end. Numbeo puts Kathmandu's gross rental yield at 2.18% in the city centre and 1.76% outside, on a crowd-sourced sample of 125 entries from 23 contributors. Thin, and it drifts between pages, but it is the only figure published with a stated method.

The 6 to 8% figure circulating on developer and portal blogs does not survive contact with either. None of those sites states a methodology, and one of them puts Nepal's 2026 GDP growth at 5.5 to 6% when NRB and the Ministry of Finance both say 3.85%. Treat that whole tier as marketing.

What comes out of the gross

The tax is the line most first-time landlords have backwards, and it changed this fiscal year.

The federal 10% does not apply to you. Everyone quotes a 10% TDS on rent, and Section 88(1)(5) of the Income Tax Act 2058 does impose one. Its proviso then carves out house rent received by a natural person: "प्राकृतिक व्यक्तिले घर बहाल वापत प्राप्त गरेको रकममा कर कट्टी गर्नु पर्नेछैन", no tax shall be withheld on the amount received by a natural person for house rent. Section 2 goes further and excludes it from the definition of rent altogether. The trigger is who receives the money, not who pays it. A company landlord is withheld from; an individual landlord is not.

The municipal tax is the one that bites, and KMC just cut it. Under Section 57 of the Local Government Operation Act 2074, local governments levy on gross rent. Kathmandu's Economic Act 2083, effective 1 Shrawan 2083, sets:

Two details attached to that cut. Paying property, business and rent tax together before the end of Asoj 2083 earns a 10% discount on the total, and registering a rental property becomes mandatory from FY 2083/84. A 2025 Supreme Court ruling settled the long-running double-taxation worry: local governments tax natural persons' rental income, the federal government taxes legal persons', and nobody pays both on the same rent.

The word doing the damage is gross. No deduction for repairs, none for loan interest, none for depreciation, no tax-free threshold. Compare that with how house rent tax sits outside your salary slab entirely, and the trade becomes clear: simple to comply with, punishing on a leveraged purchase, because the interest you pay the bank is invisible to the tax.

The property tax itself is a rounding error by comparison. KMC's integrated ladder charges 0.010% up to Rs 1 crore of valuation and 0.015% on the next crore, which puts a Rs 1 crore flat at roughly Rs 1,000 to Rs 2,600 a year once construction-type minimums apply.

Then the costs nobody has measured. No long-term rental vacancy data exists for Kathmandu. What exists instead is reporting on how hard landlords work to avoid it: a Pepsicola owner told the Kathmandu Post he had paid brokers Rs 2,000 per tenant for five years because otherwise the room sits empty a long time. Budget a month. On upkeep, a basic-to-standard interior repaint of a 1,000 sq ft flat runs about Rs 30,000 to Rs 56,000 at prevailing Kathmandu rates, and note that under Section 394 of the Civil Code the tenant carries the repair obligation unless your agreement says otherwise.

The worked flat

Rs 1.5 crore two-bedroom, let at Rs 40,000 a month. Everything below is my arithmetic.

Gross yield 3.20%. Net yield 2.27%. The deductions took nearly a third of the rent, and not one rupee of mortgage interest has appeared yet.

So how many flats

You need a target. The National Statistics Office's Living Standards Survey IV puts Kathmandu Valley per-capita annual consumption at Rs 263,318 in 2022-23 prices, and at the top quintile, which is the realistic profile for somebody who owns flats, at Rs 515,230. For a couple that is Rs 85,872 a month in 2022-23 prices. Escalating by NRB's annual average CPI for the three years since (5.44%, 4.06%, 3.08%) gives a factor of 1.131, so call it Rs 97,121 a month, or Rs 11.65 lakh a year, in 2026 prices. That escalation is mine; no newer household survey exists.

At Rs 3,40,900 net per flat, that is 3.4 flats, about Rs 5.13 crore of property.

Now the comparison that reframes the whole exercise. The same Rs 11.65 lakh from a one-year fixed deposit, at the 2.85% Nabil pays an individual for six months to a year, netting 2.679% after the 6% interest TDS, needs Rs 4.35 crore. Property wins, but by less than a fifth, for a vastly larger operational burden.

Watch the FD number people quote, incidentally. The 4.55% headline is a ten-year-plus tenure. One-year money gets 2.76% to 3.00%, which is why where to park money as FD rates fall became a live question at all.

And both lose. Inflation ran 5.14% year-on-year at mid-July 2026, against a 3.08% average for the fiscal year. A 2.27% net yield is a real-terms loss on the income line. Rental property only comes out ahead if the property appreciates, which brings up the thing nobody can tell you.

Nobody knows what Kathmandu property has returned

Nepal publishes no land or house price index. Not at NRB, not at the NSO.

The "27.7% a year, doubling every three and a half years" figure that still circulates traces to a Nepali Times piece from February 2022, written at the top of the bubble, citing an NRB report it never names. Every 2026 percentage that turns up in search comes from property vendors with no method, including a widely repeated claim that an NRB review found central apartment prices up 28% in three years, which does not appear anywhere in NRB's actual report.

The honest proxies point sideways rather than up. Government minimum valuations for FY 2083/84 rose about 10% across the valley, with Durbar Marg at Rs 76 lakh per aana, but the Balkhu to Banasthali corridor was cut from Rs 47 to Rs 43.5 lakh. That series is a tax base, not a market. Transaction revenue tells a similar story: Rs 74.6 billion in FY 2078/79, collapsing to Rs 41.2 billion, recovering to Rs 60.73 billion in FY 2082/83 at plus 24%, still below the peak four years on. NRB's first real estate market report describes revenue as remaining below past highs, indicating a more cautious market environment.

Anyone selling you a flat on the strength of guaranteed appreciation is quoting a number that does not exist.

The financing rule that decides it

Here is the constraint that stops most people before the yield math ever matters.

NRB's Unified Directive 2082 caps real estate lending at 50% LTV generally, allows 70% on a personal residential home loan explicitly defined for a house to use yourself or to let out, and grants 80% on a first home up to Rs 3 crore. That top tier carries four conditions, and one of them closes the door: rental income may not be shown as the borrower's source of income. The unit must also be up to 3,000 sq ft, for your own use, with no prior housing loan from any bank.

So the first flat can be financed at 80% only if you live in it and do not lean on rent to qualify. The second, the one you actually rent out, needs 30% down in cash, and one bank may give only one such loan per family. On a Rs 1.5 crore flat that is Rs 45 lakh before registration costs, on top of whatever the first house absorbed.

Then check the interest against the yield. Home loans run roughly 6.5% to 8.5%, with Everest Bank at 7.25% fixed. Borrowing at 7.25% to buy an asset netting 2.27% is a negative carry, funded out of your salary in the hope of appreciation nobody can measure. That is a leveraged bet on Kathmandu land prices wearing a rental income costume. It might pay. It is not a pension.

One more piece of systemic context worth holding. 62.9% of all outstanding bank credit in Nepal is secured against land and building. If valley prices move, they move against a banking system heavily collateralised on the same asset you would be accumulating.

What you actually need to know

1. Two to four percent gross, about 2.3% net, is the honest range. Kathmandu's rent tax takes a slice of gross with no deductions, vacancy is real and unmeasured, and the 6 to 8% in developer marketing has nothing behind it. Retiring on rent means roughly Rs 5 crore of property; the same income from FDs needs about Rs 4.35 crore.
2. Check your ward's current rate before budgeting. KMC cut residential rent tax to 5% and 7% from 1 Shrawan 2083, commercial stays at 10%, and registering a rental property is now mandatory. The federal 10% TDS never applied to an individual landlord in the first place.
3. NRB will not let rent qualify you for the cheap loan. The 80% first-home tier bars showing house rent as your income source, so a buy-to-let needs 30% down at 70% LTV. At a 7.25% mortgage against a 2.27% net yield, you are betting on appreciation in a country that publishes no price index.

Sitting on one flat and wondering whether the second one makes sense? Email parjanya57@gmail.com with the purchase price, the rent you can realistically get and your ward, and I'll run the net yield against your alternatives.

This post is part of the Nepal Money Basics guide — the big-ticket decisions section.