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