Country Buying Guides - Sri Lanka

The conveyancing process

• Independent Lawyer
It is essential to use an independent lawyer with a legal knowledge of both the English and Sri Lankan legal systems, who are able to translate the documents and explain the terms to your full understanding.

• Due Diligence
It is important to carry out due diligence on the property you are purchasing in order to ensure there are no encumbrances on the property. Your independent lawyer will do this on your behalf.

• Who Can Purchase
Foreigners can freely buy properties in Sri Lanka, however there is a Land Tax for foreigners at 100% of the property value. The 100% tax is also levied when buying through a foreign company with more than 25% of shares are owned by foreigners. An alternative is to lease the land for 99 years, bringing the tax down to 7%.

• Visa's
If you are considering buying a home or land in Sri Lanka, then you are able to remain for a total of 6 months in any 12 month period on a Tourist Visa. On arrival you will receive a 30 day Visa stamp in your passport, free of charge. After which you can obtain a Visa extension, initially for 2 months, then can be extended for a further 3 months.

• Who can sell?
The legal owner of the property is the only one allowed to sell his property; in cases where a 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.

• The transfer contract
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.

• How to pay?
All property transactions are done in cash, in rupee. Most locals do not accept cheques or money transfers.

• The deposit
In cases where you do not have enough money to purchase the property at once, most locals accept advance deposits for the property. It is expected that the deposit would amount to 10% - 20 % of the property’s value. Money to pay for the deposit can be secured by a lawyer, trustee or other middleman. The shorter the period between the advance deposit and the final buy the better. It is advisable to be in Sri Lanka for the final buy, although a Power of Attorney is often used to save the time and expense of flying out to Sri Lanka.

• Costs and Taxation
Stamp Duty is LKR3,000 (£15) for the first LKR100,00 (£475) of the buying price, and LKR4,000 (£20) for each additional LKR100,000 (£475). Capital Gains tax was abolished in 2002. Yet one must remember the 100% Land Transfer tax mentioned above.

• Inheritance
Most foreign legal systems’ inheritance law is different to our system, hence it is extremely important to use your independent lawyer to help you make a will so that in the unfortunate event of your passing, your wishes and not the word of the law is followed.

In Assocation With The International Property Law Centre LLP