Can Foreigners Own Real Estate in Sri Lanka?

There is a lot of confusion amongst foreigners as to whether it is possible to own real estate in Sri Lanka. We explain the buying process for foreigners and the typical costs involved.

On first glance it would appear that ownership of real estate by foreigners is prohibited in Sri Lanka. Officially Sri Lanka law states that the “Outright transfer of property to foreigners is prohibited.” (1) This type of prohibitive legislation is par for the course when investing in real estate in South East Asia and is easily navigated. Both Indonesia and Thailand have had similar legislation in place for years but you would never know it from the level of activity in the market by foreign buyers.

As an organization being in the property business, whose main partners have been foreign, we have developed a number of solutions to enable foreign partners to own freehold real estate. These solutions do not require lease agreements like you would find in Thailand. Our solutions provide owners with complete control of their property and perpetual freehold ownership.

For those unfamiliar with property investment in South East Asia, the process can seem a little daunting. As experts in this field, we will assist you at every stage and help you understand how you can own property freehold.

Our most commonly used freehold ownership solution for foreigners is as follows:

  • Form a private limited company in Sri Lanka. This is not a normal trading company it is created      simply for the purpose of acquiring the chosen property. We will fully assist you with setting this up.
  • The property is purchased in the name of the newly formed company.

Typical purchasing costs for this solution are as follows:

  • Formation of Company, Nominee Service, and Opening of Bank Accounts: 750 USD
  • Lawyer Fee including Due Diligence: 2% of the Purchase Consideration
  • Stamp Duty: 4% of the Purchase Consideration.

The above process typically takes no more than four weeks to complete. Having chosen your property, there is no requirement for you to be in Sri Lanka at the time of the purchase. We would handle the transaction on your behalf and provide you with regular updates via email.

Should you sell the company, the process is straight forward and tax efficient regardless of whether you sell to a local or foreign buyer. There is no capital gain tax and all expenses are met by the buyer.

For more information on our tax efficient freehold ownership solutions for foreigners, please contact us.

 

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