Buying Land or Apartment as a Foreigner in Sri Lanka
Foreigners intending to invest in real estate in Sri Lanka should be aware of the specific legal framework governing the purchase of land or apartments. The regulations differ for land and apartments, with certain restrictions and conditions for foreign ownership.
🏡 1. Buying Land in Sri Lanka
Foreigners face strict rules when acquiring land in Sri Lanka. The Land (Restrictions on Alienation) Act No. 38 of 2014, as amended, regulates these transactions.
Outright Ownership
Foreign nationals cannot own land outright in Sri Lanka. The law completely prohibits the transfer of freehold land to a foreigner, a foreign company, or a company with 50% or more foreign shareholding.
Leasehold Rights
However, foreigners can lease land for up to 99 years. They must pay the required lease duties and registration fees.
Since 2016, the Land Lease Tax—previously 15%—has been abolished, making long-term leases more attractive.
Corporate Ownership
A company registered in Sri Lanka with at least 51% local ownership may buy land.
Fully foreign-owned companies cannot purchase land but can lease property for approved commercial or industrial projects.
Exceptions
In certain cases, the law allows flexibility:
Board of Investment (BOI) projects approved by the Cabinet may qualify for exemptions.
A foreigner married to a Sri Lankan citizen may buy land in the local spouse’s name.
Listed companies and dual citizens may also qualify under specific provisions.
🏢 2. Buying Apartments in Sri Lanka
When it comes to apartments, Sri Lankan law is far more favorable to foreigners.
Apartment Ownership
Foreigners can purchase condominium units without restriction, provided they buy units above the ground floor.
Unlike land, the Act places no limits on the percentage of apartments a foreigner may own in a single building.
Payment Rules
Buyers must remit funds through inward foreign remittance to Sri Lanka.
Using official banking channels ensures compliance with Central Bank foreign-exchange regulations and allows easy repatriation later.
📜 3. Legal Process for Purchasing Property
Whether buying an apartment or leasing land, following the correct legal process is essential.
- Title Search
Always hire an attorney-at-law to conduct a title search. This confirms that the property is free from disputes, encumbrances, or fraud. - Sales Agreement
After the title check, both parties sign a preliminary sales agreement that outlines the purchase price, deposit, and other conditions. - Deed of Transfer or Lease Agreement
For land, a lease agreement is signed before a notary.
Registration
Finally, the notary registers the deed or lease with the relevant Land Registry.
Registration legally confirms the buyer’s or lessee’s rights to the property.
💰 4. Taxes and Fees
Foreign buyers must pay several statutory fees and taxes during the purchase process.
| Item | Land | Apartments | Details |
| Stamp Duty | 4% | 4% | Based on the declared property value |
| VAT | — | May apply | Charged if purchased from a VAT-registered developer |
| Land Lease Tax | Not applicable after 2016 | — | Removed for all leases executed after 1 Jan 2016 |
🌾 5. Restrictions on Agricultural Land
Foreigners cannot purchase or lease agricultural land in Sri Lanka.
This restriction protects local farming resources and preserves the island’s agricultural sustainability.
💵 6. Repatriation of Sale Proceeds
When a foreign owner sells property in Sri Lanka, they may repatriate the funds overseas.
To do so, they must prove that the original purchase was made through an inward remittance and comply with exchange control regulations.
⚖️ Summary
*Foreigners cannot own land outright, but they can own apartments or lease land for up to 99 years.
*Transactions must comply with the Land (Restrictions on Alienation) Act and Central Bank rules.
*Always engage a qualified attorney to perform due diligence and ensure full legal compliance.
*Using inward remittance is essential for both legality and future repatriation.
Chathuranga Bandara, Attorney at Law
A Guide to Buying Property in Sri Lanka: Key Considerations and Legal Insights
A Step-by-Step Guide to Buying Property in Sri Lanka: Key Considerations and Legal Insights
Purchasing property in Sri Lanka can be a rewarding investment, whether for residential, commercial, or holiday purposes. However, navigating the legal framework and understanding the key considerations involved are crucial to ensuring a smooth transaction. This guide provides a step-by-step approach to buying property in Sri Lanka, along with essential legal insights.
Step 1: Identify the Right Property
Before beginning the legal process, conduct thorough research to find a property that meets your needs. Consider:
- Location and accessibility
- Purpose (residential, commercial, or investment)
- Market value and future appreciation
- Infrastructure and amenities
Step 2: Verify Ownership and Title Deed
Once you have identified a property, verify its ownership and legal status by checking the Title Deed. Key aspects to consider:
- Ensure the seller has a clear and marketable title
- Verify if there are any encumbrances, mortgages, or caveats on the property
- Check if the property has a history of disputes or litigation
Step 3: Conduct a Title Search
A Title Search is essential to confirm the authenticity of the title and uncover any legal issues. This can be done at the Land Registry for the respective district, covering at least the past 30 years.
Step 4: Obtain a Survey Plan
A certified Survey Plan is required to confirm property boundaries. The survey plan should be:
- Certified by a Licensed Surveyor
- Free from disputes regarding land demarcation
- Up to date with recent amendments or subdivisions
Step 5: Obtain a Clearance Certificate
The seller must provide a Non-Vesting Certificate (NVC) or a Certificate of Conformity (COC) (if applicable) to ensure compliance with local authority regulations. This helps confirm that the property is not under any government acquisition.
Step 6: Enter into a Sale Agreement
Once all verifications are complete, a Sale Agreement (also called an Agreement to Sell) is drafted and signed. This includes:
- Sale price and payment terms
- Obligations of buyer and seller
- Timelines for the final transfer
- Legal repercussions in case of default
Step 7: Obtain Approvals from Local Authorities
Certain properties, especially those under state leasehold, require approval from local authorities such as:
- Urban Development Authority (UDA)
- Municipal Council or Pradeshiya Sabha
- Coastal Conservation Department (if applicable)
Step 8: Pay Stamp Duty & Registration Fees
Before executing the final deed, you must pay the required Stamp Duty, which varies based on property value:
- 3% on the first LKR 100,000
- 4% on any amount exceeding LKR 100,000 Additionally, notary fees and registration fees apply.
Step 9: Execute the Deed of Transfer
The final transfer of property occurs through the Deed of Transfer, which must be:
- Prepared and attested by a Notary Public
- Signed by both parties and two witnesses
- Registered at the Land Registry
Step 10: Obtain Possession and Update Records
Once registered, the buyer should:
- Obtain physical possession of the property
- Update ownership details with the local Municipal Council or Pradeshiya Sabha
- Ensure transfer of utility bills and tax records
Legal Considerations for Foreign Buyers
Foreigners can buy apartments above the 4th floor but cannot directly own freehold land. However, they can:
- Enter into a 99-year lease agreement
- Purchase property through a Sri Lankan-registered company
Conclusion
Buying property in Sri Lanka requires careful due diligence, legal verifications, and compliance with local regulations. Engaging a qualified lawyer is essential to navigating the legal process smoothly and securing your investment