From a simple house to an industrial warehouse, buying, leasing or selling property is always a difficult and challenging procedure for both, individual property buyers and commercial property seekers. Sri Lanka has risen in popularity with foreigners who are looking to buying property in the island. The island is enjoying an expanding economy presently and the gross domestic product per capita has risen to more than 9,425 US dollars, resulting in greater purchasing power.
As is the case with most developing countries, there are restriction in foreign ownership assets like land and property. Nonetheless, the advent of the new government and the subsequent budget has seen the 15% tax on buying leases removed, allowing foreigners to buy up to a 99 year lease without tax. For foreigners looking to buy entirely freehold land, exemption to tax is feasible on a case by case basis.
The property purchase process in Sri Lanka
The buying process itself is not very different from many other countries. Foreigners have the opportunity to freely buy properties as long as they are prepared to pay the Land Tax for foreigners at 100% of the property value. The alternative to this is to lease the land for 99 years, bringing down the tax to 7%.
The most important thing to do when a foreigner buying property in Sri Lanka is to hire the services of an independent lawyer or notary you can trust and like in all other countries, the buying process cannot be completed without a lawyer. The lawyer or notary you choose should be able to converse easily in English as well as the native language of the seller so that both parties can avoid communication or contract problems.
Hiring a real estate agent will make the process of finding that ideal property much more straightforward and easier. But make sure you check their reputation and work before hiring them.
The next step is negotiating the legal checks and price. After finding the ideal property, you should make an offer or negotiate the price set by the seller. Be ready for a lot of bargaining because Sri Lankans love a good haggle!
Your lawyer will then check the plan and the deeds of the property at the Land Registry to make sure the seller is the only legal owner. Additional checks will also be made for leasing agreements or eventual debts. If, for some reason, there are some ambiguities regarding the property but you still want to go ahead and buy it, make sure you buy a title insurance to protect you from any future claims to the property.
Signing the contract
After both parties have agreed on a price, the lawyer then sets up a contract that both sides have to sign. If there are more owners to the property, then each of them has to sign the contract. You generally pay a deposit of 10% of the entire price afterwards if you can’t pay all at once. Transfer is considered valid from the moment of signature by both parties. Finally the lawyer has to register the deed at the Land Registry and the new owner at the municipality and you receive a certificate of ownership. No deal is closed and legalized until the new owner is registered.
Hope your question “Can foreigners buy property and land in Sri Lanka?” was answered. Now head on to the list of properties foreigners can buy and our property gurus will advice and help you with the best options. Our consultation is absolutely FREE.