Buying Residential Property in Sri Lanka by Foreigners
This guide is designed to highlight the major aspects relating to a property purchase in Sri Lanka.
This is not a legal guide.
Foreigners can freely buy properties subject to the payment of the Land Tax applicable for foreigners at 100% of the property value. An alternative is to lease the land for 99 years, bringing the tax down to 7%.
If you consider buying (any) property in Sri Lanka it is advisable to consult with a specialized lawyer. When buying property, it is important to hire a lawyer, who will prepare the contract. No sale is considered final without the legal transfer of ownership from seller to the buyer.
Buying Property in Sri Lanka as a BOI (Board of Investment) project
While a BOI status provides many benefits (no Foreigner Tax, 100% Ownership, Residence Visa and Work Permit, Duty Free Import of Goods, Tax Exemption) one must keep in mind that a BOI status is only granted for Commercial Projects.
Sri Lanka Title Deeds and Land Ownership Documents
The only valid title deed is the one which is registered at the regional Land Registry. It specifies the borders, any limitations (like providing public access to a beach/road) and most importantly the name(s) of the owner(s). If there are several owners named in the title deed, ALL must agree to and sign the purchase contract. Your ownership is only legal and enforceable if registered at the regional land register. The legal owner of the property is the only one allowed to sell his property; in cases where more than one person is considered the legal owners of the land, each owner should agree to the sale. In most cases, an estate agency would ensure the ownership of the property even before the public offering. The deed of ownership must be checked by the lawyer in the Land Registry.
Both parties sign the transfer contract in the presence of the lawyer. The buyer also makes the full payment. Transfer is considered valid from the moment of signature by both parties. After which, the lawyer then registers the property in the buyer’s name.
This applies to long-term leases, too. They MUST be registered at the Land Registry.
Without a registration all contracts/agreements you might have little validity.
Buying Property in Sri Lanka through a Local Partner
As mentioned above, the only relevant factor when it comes to property ownership in Sri Lanka is the name in the Land Registry. If you consider buying property through a local partner you should know the person (obviously) very well. The big question really is if something should happen to your partner. All private contracts you might have will be null and void; the inheritance (including the land in his name) will go to the relatives. You might consider this carefully.
What is a "pearch"?
The traditional land measurement in Sri Lanka is the "Perch". Here is some help with the conversion:
A Perch is 25 sqm
4.000 sqm are 160 Perches or one Acre
2,5 Acres are one Hectare