property · 2 min read
Buying Property in Sri Lanka as a Foreigner: What Actually Applies
Foreigners cannot buy freehold land in Sri Lanka. They can hold 99-year leases, buy apartments above the fourth floor outright, and own through a local company — each with real trade-offs.
· Galle
The rules around foreign property ownership in Sri Lanka have changed several times in the last fifteen years, and a great deal of what is written online is out of date. Here is the current position.
This is general information, not legal advice. Engage a Sri Lankan attorney before committing to any transaction.
The core restriction
Foreigners cannot purchase freehold land. This has been the position since the Land (Restrictions on Alienation) Act. There are three established routes around it, each with genuine trade-offs.
1. Long lease (99 years)
The most common route. A foreign national may lease land for up to 99 years. The lease is registered, transferable and inheritable.
- Straightforward and well understood by local lawyers
- You do not own the underlying land
- Resale value depends on the remaining term — a lease with 60 years left is worth materially less than one with 95
2. Apartments above the fourth floor
Foreigners can buy freehold title to an apartment on the fifth floor or above. This is the cleanest form of true ownership available and is why most foreign-targeted developments in Colombo are high-rise.
3. Local company ownership
A company incorporated in Sri Lanka can hold land, and foreigners may hold up to 49% of it. The remaining 51% must be locally held, which introduces real counterparty risk. Structure it carefully or not at all.
Due diligence that actually matters
Sri Lankan title can be complicated, particularly for older properties and inherited land.
- Title search — a full 30-year search at the Land Registry, done by your attorney.
- Survey plan — verify the boundaries physically match the plan. Discrepancies are common.
- Local authority approval — confirm the building is approved and matches what was built.
- Coastal setback — anything near the shore falls under Coast Conservation Department rules. Setback requirements are strict and enforced.
- Encumbrances — mortgages, caveats, unresolved inheritance claims.
Costs beyond the price
| Item | Approximate |
|---|---|
| Stamp duty | 3–4% of value |
| Attorney fees | 1–2% |
| Notary and registration | 0.5–1% |
| Agent commission | 2–3% (usually seller-paid) |
Budget 5–8% above the purchase price in transaction costs.
Getting money in and out
Funds must come through a Special Foreign Investment Deposit Account (SFIDA) or an Inward Investment Account. This matters enormously: it is what makes proceeds repatriable when you sell. Buying with funds that were not routed correctly can leave you unable to take your money out.
Set the account up before you transfer anything.