Bhutan’s Real Estate Shake-Up in 2025: Shocking New Regulations & What They Mean for Investors

Table of Contents

• Introduction: Why 2025 Is a Pivotal Year for Bhutan’s Real Estate
• Regulatory Landscape: Key Authorities and Legal Framework
• Ownership Restrictions: Citizens, Foreigners, and Corporate Entities
• Zoning & Land Use: Urban Expansion, Rural Protections, and Environmental Rules
• Licensing & Compliance: The Process for Developers and Investors
• Taxation & Fees: Land Taxes, Property Transfers, and Rental Income
• Enforcement and Penalties: What Happens When Regulations Are Breached
• Recent Amendments: Major Regulatory Changes in 2025
• Market Impact: Key Statistics and Trends Since the New Rules
• Outlook: Predicted Developments and Challenges Through 2030
• Sources & References

Introduction: Why 2025 Is a Pivotal Year for Bhutan’s Real Estate

Bhutan’s real estate sector stands at a critical crossroads in 2025, driven by evolving regulations, increased government oversight, and shifting market dynamics. Over the past decade, rapid urbanization—particularly in cities like Thimphu and Phuentsholing—has placed unprecedented pressure on land resources and housing supply. The Royal Government of Bhutan recognizes the need for robust legal frameworks to manage these challenges, prompting significant policy developments and legislative amendments in recent years.

One of the most notable regulatory milestones is the enforcement of the Urban Land Act of 2007 and the Land Act of Bhutan 2007, which lay the foundation for land administration, ownership rights, and transaction procedures. However, as demographic shifts accelerate and the demand for affordable housing surges, these laws are being scrutinized and updated for greater efficiency and transparency. In 2023, the National Assembly reviewed key amendments to the Land Act, focusing on limiting speculative trading, increasing taxation on vacant land, and tightening the eligibility for non-Bhutanese investors National Assembly of Bhutan.

Compliance requirements have also become more stringent, with the Royal Monetary Authority of Bhutan implementing stricter anti-money laundering protocols for property transactions and the Ministry of Works and Human Settlement enforcing building codes to promote sustainable urban development. As of 2025, all real estate agencies must be licensed and adhere to regulatory standards set by the Anti-Corruption Commission and the Department of Human Settlement, reflecting the government’s commitment to curbing illicit activities and ensuring ethical conduct in the sector.

Statistically, Bhutan’s annual urban population growth rate has hovered around 3.7% in recent years, leading to a notable increase in building permit applications and land transactions National Statistics Bureau of Bhutan. Despite the sector’s modest share in GDP (approximately 8% as of 2024), the government forecasts a steady upward trend, contingent on effective regulatory enforcement and prudent land management.

Looking ahead, 2025 marks a pivotal year as Bhutan finalizes comprehensive real estate reforms designed to strike a balance between economic growth, environmental sustainability, and social equity. The ongoing review of land laws and enhancement of compliance mechanisms signal a proactive approach, setting the stage for a more transparent and resilient property market over the next few years.

Regulatory Landscape: Key Authorities and Legal Framework

Bhutan’s real estate regulatory landscape is shaped by a combination of constitutional directives, statutory laws, and administrative oversight, all designed to balance sustainable development with the preservation of cultural heritage. The principal authority overseeing real estate matters is the National Assembly of Bhutan, which enacts legislation, while implementation and compliance fall under agencies such as the National Housing Development Corporation Limited (NHDCL), the Road Safety and Transport Authority (for land use associated with transport), and the Ministry of Agriculture and Forests (for rural and agricultural land).

The cornerstone of real estate regulation is the Land Act of 2007, last amended in 2012, which governs land ownership, transfers, registration, and dispute resolution. The Act established the National Land Commission Secretariat (NLCS) as the central body for land administration, including cadastral surveying, land registration, and issuance of title deeds. The NLCS also administers the thram (land register) and enforces zoning restrictions, especially in urbanizing areas such as Thimphu and Phuentsholing.

Key statutory instruments include:

• Land Act of Bhutan 2007 (as amended 2012): Details ownership rights, transfer protocols, and compensation in cases of land acquisition for public purposes (National Land Commission Secretariat).
• Immovable Property Transfer Tax Act 2020: Regulates taxation on the transfer of property, supporting transparency and revenue generation (Department of Revenue and Customs).
• Urban Development Control Regulations: Stipulate building codes, zoning policies, and environmental compliance criteria, overseen by the Ministry of Works and Human Settlement.

Foreign ownership remains tightly restricted. Only Bhutanese citizens or government entities may own land, and all transactions involving property must be registered with the NLCS. In 2025, the government is reviewing amendments to improve digitalization of land records and streamline compliance, reflecting Bhutan’s drive towards e-governance (National Land Commission Secretariat).

According to the NLCS, as of 2023, over 70% of Bhutan’s land remains under forest cover, and less than 8% is classified as arable, underscoring the sensitivity of land allocation and real estate expansion. Compliance efforts focus on curbing illegal settlements and ensuring that urban growth aligns with the Gross National Happiness Commission’s sustainable development goals.

Looking ahead, regulatory reforms are expected to prioritize urban planning, digital transparency, and housing affordability, while maintaining strict land use controls to safeguard environmental and cultural assets. The roles of the NLCS, NHDCL, and sectoral ministries are set to expand as Bhutan addresses rapid urbanization and housing pressures in the coming years.

Ownership Restrictions: Citizens, Foreigners, and Corporate Entities

Bhutan’s real estate regulations are characterized by a strong emphasis on national ownership and preservation of land for citizens, rooted in constitutional and statutory provisions. As of 2025, the Land Act of Bhutan 2007 remains the primary legal framework governing property ownership, transfer, and use. The Act strictly limits land and property ownership to Bhutanese citizens. No foreign individual or corporate entity—whether fully foreign-owned or joint ventures—may directly own land in Bhutan. This policy is reinforced by Article 7 of the Constitution of the Kingdom of Bhutan, which guarantees the right to property only to citizens and prohibits the transfer of ownership to non-citizens.

• Citizens: Only Bhutanese citizens, either natural-born or naturalized, are allowed to own land and real estate. Ownership is subject to ceilings—individuals may not exceed landholding limits prescribed under the Land Act (e.g., 25 acres for dry land, 10 acres for wet land, etc.). Corporate entities registered in Bhutan can own property only if the shareholders are 100% Bhutanese nationals. Transfer of land requires approval and registration with the National Land Commission Secretariat.
• Foreigners: Foreigners, including expatriates and foreign corporations, are expressly barred from owning land or buildings in any form. Leasing arrangements may be permitted in certain sectors (e.g., tourism, business), but these do not confer ownership rights and are subject to maximum lease terms (usually up to 30 years) and regulatory scrutiny. The Ministry of Industry, Commerce and Employment oversees compliance for foreign business activities, but cannot grant foreign property ownership.
• Corporate Entities: Bhutanese companies and legally registered entities can own property, provided all shareholders are Bhutanese and the purpose aligns with national interests. Real estate development for commercial purpose is subject to additional environmental and urban planning regulations enforced by the National Housing Development Corporation Limited and relevant municipal authorities.

Recent parliamentary discussions have reaffirmed these restrictions amid calls for foreign investment, emphasizing national sovereignty and environmental sustainability. According to the National Assembly of Bhutan, there are no imminent plans to liberalize these regulations through 2025 and the next several years. Compliance is strictly monitored, with penalties for illegal transfers or proxy ownership. Consequently, foreign investment in real estate remains limited to indirect participation via long-term leases or partnerships with Bhutanese entities, but never actual ownership. The outlook indicates continued protectionism in Bhutan’s real estate sector, aligned with the nation’s Gross National Happiness principles and preservation of cultural heritage.

Zoning & Land Use: Urban Expansion, Rural Protections, and Environmental Rules

Bhutan’s approach to real estate regulation is deeply intertwined with its unique philosophy of Gross National Happiness (GNH), emphasizing balanced development, environmental conservation, and cultural preservation. Zoning and land use policies are centrally governed through a series of acts and guidelines aimed at managing urban expansion, protecting rural landscapes, and ensuring sustainable development practices.

The Ministry of Home Affairs and the Urban Area and Development Control Act of Bhutan 2013 provide the primary legal frameworks for urban zoning and land use. This law establishes the criteria for urban expansion, building permits, and land-use planning, requiring all municipalities to develop and adhere to Structure Plans and Local Area Plans. These plans dictate residential, commercial, industrial, and recreational zones, with strict compliance measures enforced by local governments.

Urbanization rates in Bhutan remain relatively low by regional standards, with only about 39% of the population residing in urban areas as of the most recent census, though projections from the National Statistics Bureau indicate continued gradual growth through 2025. Thimphu and Phuentsholing are experiencing the most significant urban expansion, prompting new zoning initiatives to manage congestion and infrastructure strain. The Thromde Act 2015 further empowers local governments (thromdes) to regulate construction, enforce setbacks, and manage public spaces, reinforcing orderly urban growth.

Rural protections are codified within the Land Act of Bhutan 2007, which restricts the conversion of agricultural land for non-agricultural purposes without explicit government approval. This is intended to prevent urban sprawl and safeguard food security. The law also provides for community and communal land protections, ensuring traditional land use practices can continue with minimal disruption. Recent amendments under parliamentary review in 2024-2025 focus on streamlining land transfer processes and clarifying compensation mechanisms for compulsory acquisitions.

Stringent environmental regulations govern all land development. The National Environment Protection Act 2007 and subsequent regulations from the National Environment Commission mandate Environmental Clearance Certificates for significant projects, especially those in ecologically sensitive or high-biodiversity areas. Developers must submit Environmental Impact Assessments (EIAs), and compliance monitoring is ongoing.

Outlook for 2025 and beyond: Bhutan is expected to further refine its land use policies to accommodate modest urban growth while maintaining its commitment to environmental stewardship and rural livelihoods. Digital cadastral systems and GIS-based planning tools are being piloted to enhance transparency and efficiency. However, compliance costs and bureaucratic procedures remain challenges for developers and individual landowners, with ongoing government reviews aimed at balancing regulation with the need for sustainable economic development.

Licensing & Compliance: The Process for Developers and Investors

The regulatory landscape governing real estate development and investment in Bhutan is shaped by a series of statutes, bylaws, and institutional oversight mechanisms. Compliance with these regulations is mandatory for both domestic and foreign developers, as well as investors seeking to participate in Bhutan’s evolving property market. The principal legal framework is established by the Urban Land Act of Bhutan 2007 and the Land Act of Bhutan 2007, which set forth the procedures for land registration, transfer, and permissible uses.

To operate lawfully, real estate developers must secure an official business license from the Ministry of Industry, Commerce and Employment. The licensing process entails submission of detailed project proposals, environmental impact assessments, and evidence of financial capability. Environmental clearance is a critical compliance step, administered by the National Environment Commission. For developments within urban areas, additional approval from the local municipal authority—such as the Thimphu Thromde for Thimphu city—is required, ensuring adherence to zoning, building codes, and urban planning guidelines.

Foreign investment in Bhutanese real estate remains tightly regulated. The Royal Monetary Authority of Bhutan and the Invest Bhutan (Department of Industry) enforce restrictions on foreign ownership of land, generally limiting direct property acquisition by non-citizens and requiring joint ventures or leasing arrangements for approved projects. These measures are designed to protect national interests and maintain sovereign control over land resources.

Compliance is monitored through periodic audits and reporting obligations. Non-compliance, including unauthorized land use or construction without proper permits, can result in penalties, revocation of licenses, or legal proceedings. In 2024, the Gross National Happiness Commission reiterated the importance of sustainable urban growth, signaling stricter enforcement of environmental and social safeguards for all new real estate projects.

Statistically, the Ministry of Industry, Commerce and Employment reported that, as of late 2024, there were fewer than 150 licensed real estate developers in the country, with the majority concentrated in urban centers like Thimphu and Phuentsholing. The sector is expected to grow moderately, driven by urbanization and infrastructure expansion, but the regulatory environment is projected to remain stringent through 2025 and beyond, emphasizing compliance with environmental, social, and urban planning norms (Ministry of Industry, Commerce and Employment).

Taxation & Fees: Land Taxes, Property Transfers, and Rental Income

Taxation and fees form a pivotal aspect of Bhutan’s real estate regulatory environment, affecting land ownership, property transfers, and rental income. As of 2025, the legal framework is governed primarily by the Land Act of Bhutan 2007, the Income Tax Act of Bhutan 2001 (with subsequent amendments), and various notifications and circulars from the National Revenue & Customs Administration and Department of Local Governance and Disaster Management.

• Land Taxes: Landowners are required to pay annual land taxes based on the land category (residential, commercial, agricultural) and location. The tax rates are updated periodically by local governments under guidance from the Department of Local Governance and Disaster Management. For example, urban land tax rates are typically higher than rural or agricultural rates, reflecting the premium on urbanization and infrastructure development.
• Property Transfer Fees: Transferring property ownership entails a transfer tax and administrative fees. As mandated by the Royal Monetary Authority of Bhutan and local municipal bodies, the transfer tax is generally set at 3% of the property’s assessed value, payable by the buyer at the time of registration. Stamp duty and legal documentation charges are additional and vary depending on the transaction value and property type.
• Rental Income Taxation: Rental income is taxable under the Income Tax Act. Individuals earning rental income must declare it as part of their personal income tax filings. The tax rate for rental income is progressive, subject to annual thresholds and allowable deductions for maintenance and repairs. Non-resident individuals are also liable to tax on Bhutan-sourced rental income.

Recent statistics indicate that land transactions in urban centers, particularly Thimphu and Phuentsholing, have increased by approximately 8% annually since 2022, driving higher tax revenues for local governments (Department of Local Governance and Disaster Management). Compliance rates have improved due to enhanced digitalization of land records and tax payment systems, reducing evasion and streamlining processes (National Revenue & Customs Administration).

Looking ahead, authorities are expected to further update property valuation methods and automate tax collection mechanisms by 2026, aiming for greater transparency and efficiency. Policy discussions are ongoing regarding progressive property tax reforms to address urban housing shortages and promote equitable land use (National Council of Bhutan).

Enforcement and Penalties: What Happens When Regulations Are Breached

Enforcement of real estate regulations in Bhutan is grounded in a robust legal framework overseen by multiple government agencies, notably the Ministry of Works and Human Settlement (MoWHS) and the National Council of Bhutan. The foundational legislation includes the Land Act of 2007 (updated in 2019), the Tenancy Act of 2015, and various municipal development control regulations. These laws outline strict procedures for property transactions, land use, tenancy rights, and urban development.

When real estate regulations are breached, enforcement actions are initiated by the relevant authorities. For instance, the National Land Commission Secretariat (NLCS) is empowered to investigate illegal land transfers, encroachments, and fraudulent registrations. Violations may lead to administrative penalties, civil liabilities, or even criminal prosecution depending on the severity of the offense. Common infractions include unauthorized land conversion, exceeding permitted building heights, or failing to register property changes.

• Administrative Penalties: The NLCS can impose fines and order the reversal of illegal transactions. Under the Land Act, fines for illegal land transactions can be substantial, and repeat offenders face escalated penalties. In 2023, the NLCS reported over 80 cases of land use violations nationwide, resulting in property seizures and penalties totaling Nu 3.2 million (National Land Commission Secretariat).
• Civil and Criminal Actions: Serious breaches—such as deliberate forgery of land records or large-scale encroachment—may be referred to the police and courts for prosecution. Convictions can result in imprisonment, especially where public land or government property is involved (Judiciary of Bhutan).
• Compliance Monitoring: The MoWHS and local governments conduct regular inspections of construction sites and urban developments. Non-compliance with building codes or zoning regulations often results in stop-work orders, demolition of unauthorized structures, and mandatory rectification at the owner’s expense (Ministry of Works and Human Settlement).

The outlook for 2025 and beyond suggests that enforcement will continue to intensify as digital land administration systems expand and urbanization accelerates. The NLCS is enhancing its e-registry platform for greater transparency and real-time monitoring, reducing opportunities for fraud. Authorities are also launching more public awareness campaigns to ensure that buyers, sellers, and agents understand their obligations under Bhutanese law (National Land Commission Secretariat). This trend is expected to bolster compliance and minimize regulatory breaches in the coming years.

Recent Amendments: Major Regulatory Changes in 2025

In 2025, Bhutan’s real estate sector has witnessed significant regulatory transformation aimed at enhancing governance, promoting sustainable development, and curbing speculative practices. The most notable development is the enactment of the Land Act (Amendment) 2025, which strengthens the regulatory framework around land transactions and urban property development. This amendment, passed by the National Assembly, reinforces transparency in land registration, introduces stricter due diligence for transfers, and formalizes digital land records to minimize disputes and fraudulent claims (National Assembly of Bhutan).

The Bhutan Construction and Real Estate Regulatory Authority (BCERRA), established in late 2024, became operational in 2025 as the principal agency overseeing compliance and licensing in the sector. BCERRA’s mandate includes regular audits of real estate developers, enforcement of new zoning guidelines, and monitoring adherence to environmental and social impact requirements. One major regulatory change is the cap on foreign ownership at 49% for joint ventures, aiming to balance foreign investment with local interests (Ministry of Industry, Commerce and Employment).

The new Urban Land Use Regulation 2025 introduces stricter zoning laws and height restrictions in Thimphu and other major urban centers, addressing concerns over congestion, infrastructure stress, and the preservation of cultural aesthetics. These zoning provisions are expected to slow the pace of high-rise development and redirect investment toward sustainable and affordable housing initiatives (Thimphu Thromde).

On the compliance front, the Royal Monetary Authority of Bhutan has tightened lending requirements for real estate purchases, increasing the minimum down payment for home loans to 30% and imposing stricter scrutiny on loan-to-value ratios. These measures are designed to prevent overheating in the property market and reduce systemic financial risks (Royal Monetary Authority of Bhutan).

Key statistics from 2025 show a 12% reduction in speculative land transactions compared to 2023, and the registration of over 80% of urban land parcels in the new digital registry. The outlook for the next few years suggests a stabilization of property prices, increased investor confidence, and a gradual shift toward sustainable development as the sector adjusts to the new regulatory environment (Gross National Happiness Commission).

Market Impact: Key Statistics and Trends Since the New Rules

The introduction of updated real estate regulations in Bhutan over the past few years, particularly those enforced by the Royal Monetary Authority of Bhutan and the National Housing Development Corporation Limited, has led to significant shifts in the property market. The implementation of the amended Tenancy Act (2023) and the Real Estate and Construction Regulatory Authority’s new compliance guidelines have sought to address housing affordability, land use, and transparency in transactions.

• Mortgage and Lending Controls: The Royal Monetary Authority’s 2023 circular capped the maximum loan-to-value (LTV) ratio for residential properties at 70%, aiming to reduce speculative buying and stabilize price growth. As a result, annual real estate lending growth has moderated to around 6% in 2024, compared to double-digit increases between 2021 and 2022 (Royal Monetary Authority of Bhutan).
• Land Use and Zoning: The National Land Commission Secretariat has enforced stricter zoning rules, especially in Thimphu and Phuentsholing, to curb unplanned urban sprawl. Over 400 cases of land use non-compliance were processed in 2023, marking a 35% increase in enforcement actions compared to 2021.
• Rental Market Regulation: The Tenancy Act (2023) introduced mandatory registration of rental agreements and new tenant protection standards. The Judiciary of Bhutan reported a 20% reduction in rental dispute cases in urban centers following these measures.
• Foreign Ownership and Investment: Restrictions on foreign land ownership remain stringent, with only a limited number of exemptions granted through joint ventures that are reviewed by the Ministry of Economic Affairs. Foreign direct investment (FDI) in real estate accounted for less than 5% of total FDI inflows in 2024.
• Transparency and Digitalization: The roll-out of the National Land Commission’s online land transaction portal in 2023 increased registration efficiency, with 75% of land transfers completed digitally by mid-2024 (National Land Commission Secretariat).

Looking ahead to 2025 and beyond, stakeholders expect continued stabilization of property prices, increased compliance, and a gradual uptake in formal housing supply, particularly in urban areas. Ongoing policy refinement is anticipated to focus on sustainable urban development and greater market transparency, as Bhutan aligns its regulatory framework with international best practices.

Outlook: Predicted Developments and Challenges Through 2030

Looking ahead to 2030, Bhutan’s real estate regulatory landscape is expected to undergo significant transformation, driven by the government’s ongoing priorities around sustainable development, urbanization, and economic diversification. The central legislation currently governing real estate transactions and land ownership remains the Land Act of 2007, which vests all land in the state and imposes restrictions on transfer, use, and foreign ownership. The Royal Government of Bhutan has signaled its intention to update and strengthen this framework to address emerging challenges in land management, urban growth, and housing affordability.

In 2025, the Ministry of Works and Human Settlement continues to oversee policy and compliance around urban zoning, building codes, and land use planning. The government has been actively reviewing these regulations to align with Bhutan’s Vision 2030 and the 13th Five Year Plan, emphasizing the need for more transparent, efficient, and equitable real estate markets. Notably, the National Council and National Assembly have debated amendments aimed at streamlining land registration, clarifying procedures for leasehold arrangements, and curbing speculative practices that contribute to rising property prices.

A key challenge remains the limited availability of urban land, particularly in Thimphu and other rapidly growing municipalities. According to the National Statistics Bureau, urban populations have increased by over 3% annually in recent years, driving up demand for housing and infrastructure. This has led authorities to consider stricter compliance mechanisms and new incentives for affordable housing development. Meanwhile, concerns about illegal subdivisions, encroachment on public land, and disputes over land ownership continue to prompt regulatory vigilance.

• Enhanced digitalization of land records is underway, spearheaded by the National Land Commission Secretariat. By 2027, a nationwide digital land information system is expected to improve transparency and reduce transaction times.
• The government is examining potential reforms to allow non-citizen participation in specific real estate segments, particularly for commercial and tourism infrastructure, with strict safeguards against market distortion.
• Environmental conservation will remain integral to land regulations, with stronger requirements for Environmental Clearance from the National Environment Commission for major developments.

Overall, by 2030, Bhutan’s real estate regulations are likely to become more robust and adaptive, balancing economic growth with social equity and environmental stewardship. However, the pace of reform will depend on institutional capacity, political will, and public acceptance, particularly as urbanization accelerates and land scarcity intensifies.

Sources & References

• Anti-Corruption Commission
• National Statistics Bureau of Bhutan
• National Housing Development Corporation Limited (NHDCL)
• Department of Revenue and Customs
• National Land Commission Secretariat
• Ministry of Home Affairs
• Land Act of Bhutan 2007
• Department of Local Governance and Disaster Management
• Judiciary of Bhutan