Would you like to own a villa on the coast of the tropical island of Sri Lanka? If such thoughts cross your mind, this article is for you. In it, I will detail how you can make your dream a reality.
How to Buy Real Estate in Sri Lanka
More and more people are now thinking about moving or the possibility of spending winters in Sri Lanka. Some want a backup location. Others want a stable income from renting out property while they are not in Sri Lanka. But many questions arise about how to do this. Can a foreigner buy real estate on the island? What are the prices, the conditions, the benefits, the taxes, and many other questions? For many years, I have observed how Russian-speaking people buy (or rather "buy" in quotes) real estate and build houses, and then they end up with various kinds of problems. They come to me with a request for help when it's already too late and nothing can be done. I feel very sorry for such people, I sympathize with their trouble, which is why I decided to write a detailed instruction on buying real estate on our island so that fewer people get into such unpleasant situations.
Let's take it in order. The bad and main news is that you cannot acquire land and a house as private property. But this should not discourage those who are determined. Because there is good news. And there is a lot of it. You can acquire land or a house in the name of a company. In this company, 51% must be owned by a Sri Lankan. We know how to legally protect you from the Sri Lankan partner and we will tell you. How to make sure that you remain the actual right-holder and beneficiary. After you set up the company, you can hire yourself as a director and get a long-term resident work visa. Alternatively, in the case of a one-time investment of $170,000, you can get an investor visa for 5-10 years.
You can also take real estate on a 99-year lease with the possibility of transferring the lease rights (which is equivalent to a sale) and specify who will be the heir. But in this case, you will still need to set up a company to get a resident visa and to have the opportunity to rent out your property.
A foreigner is allowed to buy an apartment in a condominium as private property on any floor (even below the 4th floor). In Sri Lanka, the coastline is now being built up and will continue to be built up with luxury high-rises with ocean views. A first-line apartment in Sri Lanka in a luxury complex for the price of an apartment in Moscow... What do you think is better?
Advantages of Buying Real Estate in Sri Lanka
Advantages :
- It's Sri Lanka – tropics, wonderful weather, beaches, etc. Many people dream of having their own home in a warm, paradise-like setting by the ocean. I believe this is the main motivation for most.
- Prices are still quite affordable compared to other countries and even compared to Russia (especially when comparing with the resort area of Sochi). You can now find properties to fit any budget.
- You can successfully rent out the property after purchase. The current demand for rentals is high. There are not enough good offers to meet the demand.
- When purchasing an apartment valued at $170,000 or more, you are granted a 5-10 year "Golden Visa."
- After 20 years, it is possible to become the sole owner of the property.
Disadvantages of Buying Real Estate in Sri Lanka
I want to be honest with you - there are many drawbacks. And you need to know about them:
- You cannot buy land and the house on it as private property. A foreigner can only lease it for 99 years or purchase it in the name of a company, which must have two co-owners: a Sri Lankan (51%) and a foreigner (49%). We prepare the documents and agreements in such a way that the buyer is maximally protected, and the Sri Lankan partner can do very little without the foreigner's consent. And this is all completely legal.
- The property purchase process seems insufficiently transparent to a newcomer. I would say it's more a case of being under-publicized, with too little information available about buying real estate on the island. If you compare it to Bali, Sri Lanka offers better conditions and is safer for investors. It's just that Bali is more heavily promoted.
I would not recommend doing this
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Investing in someone else's property. It would seem that all people are adults, and everyone is surprised that someone would even think of doing this – buying property in someone else's name or investing their money in someone else's real estate. And on top of that, it's a foreign country where you are a guest. But Sri Lankans have an incredible charm that turns on and off when needed, which makes you lose your head and register property in their name, trusting them like your best friend who "doesn't want anything." Moreover, "he said that a foreigner can't buy property in their own name in Sri Lanka, so we bought it in his name." And there are many, many such trusting people.
They constantly come to me with the request: "We want to sell, but we don't know how." — How are you going to sell someone else's property (the property of your Sri Lankan "friend")?! Even if you were not so naive and drew up an investment contract — all stories with investment contracts are a matter of time before you and your "best friend" and "good guy" start having problems. Sooner or later, they will start. Every year, such poor souls come to me, whose relationships with their Sri Lankan friend suddenly deteriorate sharply right after the construction is finished.
By the way, 80-90 percent of guesthouses and hotels here were built with the help of foreigners who "evaporated" after investing their finances. And no investment contract will help you — you will endlessly run around courts, waving that piece of paper, while your former friend disposes of his upgraded asset. So, if you have decided to invest in a Sri Lankan's real estate, I will not assist in such matters.
- A 99-year lease, which is equated to a purchase, is a worse option than buying through a company. It is risky because the original owner remains the legal owner. We cannot know for sure what kind of person they truly are, and whether it might occur to them to get rid of the lessee by some means after a number of years (for example, they could report the investor to get them deported - this happens all the time). In that case, the owner would retain control of the property in your absence. Furthermore, a number of laws have recently been passed that make it easier for the owner to reclaim their property.
A peculiarity of the local market
1. Every Tuk-Tuk Driver, Neighbor, and Even Relative is an Agent
Sri Lanka is a tourist country, and real estate, especially in tourist zones, can be called resort property. This is bad news not only for us but for you too. As soon as a local person finds out you want to buy something (or even if you haven't thought about it yet and they are offering), they will start suggesting various options and taking you to viewings. What's the downside for you? This neighbor-agent has no company, no firm – their reputation means nothing to them, and they aren't interested in long-term cooperation. They want to make a big, one-time score. Let me give you an example. Once, an elderly woman, a neighbor, a typical Lankan grandmother, showed us a plot for sale. Later, we found out she had added a $17,000 markup on a plot costing around $100,000. That means she added 17% to the original price. This is common practice and not even the limit. Sometimes they add a third. And they say they are just showing it, wanting to help out of the kindness of their hearts. Furthermore, if a tuk-tuk driver, for instance, has already shown you a plot, then you negotiate with him – the owner will pay him the commission. We will not undercut or interfere with your arrangements with him (please don't ask). Because cheating neighbors (even greedy, money-hungry ones) is a bad way to start a business on the island. I do not recommend viewing properties with non-professional agents. I advise contacting the owner directly or searching for property with professional agents who work on transparent terms and value their reputation and long-term work over quick, easy money.
2. No Centralized MLS-like Databases for Agents.
In Sri Lanka, searching for and selecting property to buy is like moving through a thorny path. There are no centralized property databases for agents with owners' contact details. We search for properties individually for each request.
3. Impossible to Find the Owner by Address.
In Russia, until recently, you could order a statement from the Unified State Register to find out the owner. In Sri Lanka, although they have their own land registries, plots are not tied to an address in our standard understanding. Plots are tied to a specific zone with its own name, divided and numbered. If you don't know the number, you won't find out who the property owner is. There is no legal way to find the owner. We recently went through this, searching for an owner for a client. It was beyond our comprehension. A real quest... Sometimes, only the neighbors know who the property owner is and their contacts. And they are, by definition, agents with a markup (see above).
Conclusions from all of the above:
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Do not trust a Sri Lankan, no matter how good they may seem to you.
I do not recommend investing your last or only funds on the island. Getting money out of the island is not easy.
Those who buy real estate on the island are those who genuinely really want property here and/or those who love and are already familiar with the island and its peculiarities.
- We take a deposit for property searches because it is work that consumes time and money. We personally travel, view properties, check documents – all of this requires funds. See our rates for the deposit below.
- In a serious matter like buying real estate, do not trust amateur compatriots who have only been familiar with Sri Lanka for a couple of years and are already selling something. This can be very dangerous. I wrote a post about how they can mess up even with renting accommodation. If they can't handle rentals, what can be said about purchasing in Sri Lanka – which, as you now understand, is a complex and serious undertaking.
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In a real estate transaction in Sri Lanka, we are not just agents like in Russia – our services, responsibility, and duties are much broader. We act as your guides and partners (on paper) – accordingly, we bear the responsibility. We are your guardian angels against mistakes you could make in a foreign country without knowing the language, customs, laws, and specifics of the country.
You might have thought I'm trying to scare or dissuade you. No, I want you to be as informed as possible. Forewarned is forearmed. Sri Lanka is a country of absolute exoticism, and this applies to the real estate market as well. It's also important for me that my clients or potential clients understand these nuances and our value, so we can work together more easily without problems and misunderstandings.
Other peculiarities
- It is important to consider that when purchasing land for construction, it is prohibited to erect buildings closer than 30 meters from the ocean line.
- In Sri Lanka, there is no statute of limitations on real estate transactions. Therefore, when purchasing land, our lawyer thoroughly checks the entire ownership history. This helps identify any potentially suspicious deals. Cases are not uncommon where, after a property is sold, previous owners suddenly appear, claiming their rights and initiating legal disputes with the new owner.
- Foreign citizens are prohibited from owning certain categories of land, such as agricultural land. Therefore, before purchasing, it is crucial to ensure that the chosen plot can be under foreign ownership.
Real Estate Prices in Sri Lanka
It's a complex question because prices vary greatly and are volatile. The price depends on numerous factors: distance from the ocean, plot area, whether it's in a tourist zone and how central it is to tourism, the presence of buildings on the land and their condition, whether the plot is fenced, if there are water features or if the land borders ponds or canals; whether the plot is level or has elevation changes/slopes, road access and the quality of that road, availability of electricity and water supply, the status of the documentation, whether the plot is mortgaged, the number of owners, and the type of ownership... This is far from an exhaustive list of factors influencing the cost. We can find an option for any budget.
It's also important to consider that real estate prices in Sri Lanka have increased significantly in recent years, by 1.5 to 2 times. Therefore, if you find a listing at a reasonable price, it might be an old ad with an outdated price. Prices are rising by approximately 20-30% per year.
Also, be vigilant. There are many listings with low prices. This should raise a red flag. In our experience, most underpriced plots turn out, upon verification, to have problematic documentation. Such real estate should not be purchased.
The most common question about prices on the island is: "What is the minimum budget to buy something on the island?" Based on my observations, you can start considering a purchase with a budget from $40,000.
What you need to know to navigate local prices:
In Sri Lanka, the old English system of measuring area is used - perches. 1 perch = 25 sq.m. Locals will always quote you land area in perches.
They count in "lakhs," not millions. 1 lakh = 100,000. Accordingly, 1 million is 10 lakhs. 10 million = 100 lakhs. Don't force a local to state the price in millions or hundreds of thousands. It's difficult for them to switch. Below, I will provide very approximate prices to give you a starting point.
Empty Plots or Plots with Old Houses for Demolition
Non-tourist area, far from the ocean: Can cost very little. But why would you even need it?! Generally, the cheapest land will be in villages in the center of the island. But I'm sure you don't need that, unless you plan to grow tea or other crops.
Coastal area, within walking distance to the ocean. Low-tourist locality: Prices start from $8,000 for a 100 sq.m. plot or from 6 lakhs per perch. Do the math. Get used to it. For example: land in Kaburugama.
Coastal area, tourist zone. Second-third line: Prices start from $13,500 for 100 sq.m. From 10 lakhs per perch.
Coastal area, first line in a low-tourist spot: Prices start from $20,000 for 100 sq.m. From 15 lakhs per perch.
First line in a tourist location: Hard to find and rarely sold. Prices can be astronomical. From 25 lakhs per perch for an empty plot. The record holder for high prices is the Unawatuna area and its surroundings. There, they sell for 40-45 lakhs per perch. And if it has a building on it... request prices individually – write to me on WhatsApp.
HOUSES, VILLAS, APARTMENTS, HOTELS
From $50,000-60,000 for modest houses requiring finishing work (we have such options) in a medium or low-tourist area.
A larger plot with a larger house in an area up to 1 km from the ocean. Prices from $80,000 for land with a simple house.
From $120,000 for houses suitable for conversion into a villa with a pool, requiring restoration. In a tourist zone and with land from 600 sq.m.
From $90,000 for a new villa, ready for immediate occupancy, located 3-15 km from the main tourist zone.
From $350,000 for a villa with a pool.
Hotel, commercial real estate for tourism business, guesthouse. You can purchase a guesthouse with 4-6 rooms. A minimum budget of $300,000 is required. ✔️ There are also larger hotels for sale. On the first line. Or luxury villas. The price range there is significantly higher.
From $700,000 for a hotel.
From $1,500,000 for a hotel on the first line.
Apartments / Cottages in Condominiums (Can be purchased as freehold property)
While there aren't as many apartments in Sri Lanka yet (with the exception of Colombo), multi-story residential buildings are now being actively constructed along the coast. These are primarily luxury apartments. However, there are also older buildings where prices are more affordable.
A wide selection of apartments is available in Sri Lanka's capital, Colombo, and its surrounding area. They can also be found in larger cities like Galle and Matara.
To purchase an apartment, you should have a budget starting from $100,000 - $200,000. For this amount, you can buy a 2-bedroom apartment in Galle.
There is an almost unique apartment complex in Galle, located about a 15-minute drive from the ocean. The price for apartments there is around $35,000 - $40,000. They are furnished and equipped with air conditioning! It's a ready-to-rent apartment. Furthermore, you will be the full owner, as apartments can be purchased as freehold property.
In Colombo, there are many high-quality offerings and luxury complexes. Apartment prices in Colombo start from $250,000. In good, elite complexes, prices start from $400,000 - $500,000. Such apartments can be rented out to both locals and foreigners in your absence.
Check out the listings in the "Real Estate" section on our website. I've provided approximate prices, which may vary: plus or minus the indicated amounts.
Law
The laws governing real estate transactions are:
The Land (Restrictions on Alienation) Act No. 38 of 2014.
The Land (Restrictions on Alienation) Act (Amendment) No. 3 of 2017, and
The Land (Restrictions on Alienation) Act (Amendment) No. 21 of 2018.
Key Provisions of this Law
1. Short Title. This Act may be cited as the Land (Restrictions on Alienation) Act.
2. Restriction on Alienation of Land.
(1) Despite any contrary provisions in any other written law, the transfer of ownership of any land located in Sri Lanka is prohibited if such transfer is made —
(a) to a foreigner; or
(b) to a company incorporated in Sri Lanka under the Companies Act, where any foreign shareholding in such a company, direct or indirect, is fifty percent or more; or
(c) to a foreign company, unless they are exempt as provided for in Section 3.
(2) —
(a) For a land transfer to a company incorporated in Sri Lanka under the Companies Act with foreign shareholding of less than fifty percent to remain legally valid, the foreign shareholding in such a company must remain below fifty percent for at least twenty consecutive years from the date of such transfer.
(b) If the foreign shareholding of a company specified in paragraph (a) reaches or exceeds fifty percent, contrary to the provisions of paragraph (a), due to —
(i) a change in share ownership, directly or indirectly; or
(ii) the death of a shareholder of such company and the transfer of the deceased shareholder's shares under the applicable inheritance laws of Sri Lanka to their next of kin who is a foreigner, the land transfer mentioned therein becomes void and invalid from the date of the increase in foreign shareholding: Provided, however, that a company specified in paragraph (a) —
(i) listed on the Colombo Stock Exchange takes measures to reduce its foreign shareholding to less than fifty percent within twelve months from the date of the increase in its foreign shareholding; or
(ii) other than a company specified in sub-paragraph (i), takes measures to reduce its foreign shareholding to less than fifty percent within six months from the date of the increase in its foreign shareholding, then, pursuant to the provisions of this paragraph, the land transfer specified in paragraph (a) shall be deemed legally valid from the date the foreign shareholding in such company is restored to less than fifty percent.
3. Exemption from the Application of Section 2.
(1) The provisions of Section 2 shall not apply to —
(b) a condominium property as defined in the Apartment Ownership Law: Provided that the full consideration is paid in advance via an inward remittance prior to the execution of the relevant deed of transfer;
(d) any land, the ownership of which is transferred by operation of law, by gift, or by will to the next of kin (who is a foreigner) of the owner of such land according to the applicable inheritance laws of Sri Lanka;
(e) any land, the ownership of which is transferred to a person holding dual citizenship of Sri Lanka, within the meaning of the Citizenship Act;
(h) any land, the ownership of which was transferred to a company specified in Section 2(1)(b) during the period commencing on January 1, 2013, and ending on the date certified by the reporter in respect of this Act, provided that such company has been actively operating in Sri Lanka for a period of not less than ten consecutive years prior to the date of transfer of such land;
4. Conditions for Registering Deeds for Land Transfers.
(1) A Land Registrar shall not register any deed effecting a transfer of ownership mentioned in Section 2 under the provisions of the Registration of Documents Ordinance, unless such Land Registrar is satisfied that such transfer complies with the provisions of this Act.
(2) —
(a) Despite the provisions of sub-section (1), a deed effecting the transfer of land ownership to the next of kin (a foreigner) of the owner of such land shall be registered by the Land Registrar, provided the notary attesting such transfer deed certifies in their attestation that the recipient is the next of kin of the owner of the transferred land, as recognized by the applicable inheritance laws of Sri Lanka.
(b) If a question arises as to whether a person is the next of kin of the landowner or which law applies to the inheritance, the Land Registrar shall refer the question to the District Court having jurisdiction in the area where the relevant land is located, for a decision in a summary manner.
(3) If ownership of land is transferred to a company incorporated in Sri Lanka under the Companies Act with foreign shareholding of less than fifty percent, the Land Registrar must personally verify whether the foreign shareholding in such company is less than fifty percent by requiring the secretary of such company to produce documentary proof that the foreign shareholding in such company is less than fifty percent of the total issued shares.
(4) —
(a) The secretary of the relevant company must inform the Land Registrar in writing every six months, starting from the date of registration of the relevant transfer deed, that the foreign shareholding of such company has not exceeded fifty percent of the total shares issued by such company during the said six-month period.
(b) If the foreign shareholding in a company specified in paragraph (a) reaches or exceeds fifty percent, the relevant Land Registrar must make a note of this in the relevant folio.
(5) For the purposes of this section, "Land Registrar" means the relevant Registrar of Lands before whom a transfer deed is presented for registration.
5. Restrictions on Leasing Land to Foreigners.
(1) Despite any contrary provisions in any other written law, the lease of land —
(a) to a foreigner; or
(b) to a company incorporated in Sri Lanka under the Companies Act, where any foreign shareholding in such a company, direct or indirect, is fifty percent or more; or
(c) to a foreign company, is subject to the payment of a Land Lease Tax as prescribed under Section 6: Provided, however, that the maximum duration of such a lease agreement shall not exceed ninety-nine years.
(2) Any state land leased in this manner must be returned to the state free of all encumbrances upon the expiry of the lease.
(3) Any state land leased in this manner cannot be sub-leased or sub-rented in violation of the provisions of the respective lease agreement or without obtaining prior written approval from the Minister to whom the subject of Lands has been assigned.
5A. Land Lease Tax not applicable from January 1, 2016. Notwithstanding any contrary provisions in this Act, the provisions relating to the Land Lease Tax shall not apply to the lease of any land —
(a) to a foreigner; or
(b) to a company incorporated in Sri Lanka under the Companies Act, where any foreign shareholding in such a company, direct or indirect, is fifty percent or more; or
(c) to a foreign company, under a lease agreement entered into on or after January 1, 2016, and accordingly, the Land Lease Tax shall not be levied, charged, or collected from any such person or company on or after this date.
PROPERTY TAXES in Sri Lanka: Simplifying the Complex
VAT when buying an apartment
If you are buying a property from a developer, be prepared for an 18% VAT. This tax was introduced in 2023 (when it was 15%) and increased to 18% in 2024. Additionally, the developer will charge you an extra 2.5% SSCL tax.
Property Taxes
- Long-term land lease (up to 99 years) is subject to a 1% stamp duty.
- Property purchase: Stamp duty is 3% on the first 100,000 LKR and 4% on anything above that.
- Legal fees for processing the transaction typically cost 2-3% of the purchase amount.
Taxes for Landlords
Renting out a property? You will have to pay a 1% stamp duty on the rental income.
If you are registered as a VAT payer, the tax is levied on the rental of commercial premises, but not on residential properties.
The sale of commercial real estate is also subject to VAT.
Capital Gains Tax (CGT)
Selling a property at a profit? You will have to pay a 10% CGT, regardless of the ownership period.
The tax is not levied if:
The profit is less than 50,000 LKR.
It is your primary residence (you lived in it for 2 out of the last 3 years).
For property purchased before April 1, 2018, the calculation is based on its value as of September 30, 2017.
COST OF LEGAL AND OUR SERVICES
What additional costs should you expect?!
✅ Legal services for the transaction, including contract preparation, registration, and payment of duties and stamp tax: approximately 6% of the purchase price in total. The exact cost will be determined after the property appraisal and receipt of the cadastral value.
✅ Our commission is paid by the buyer:
5% for transactions of $100,000 and above.
8% for transactions between $60,000 and $99,000.
10% for transactions below $60,000.
In some cases, the commission may be paid by the seller, not the buyer.
✅ Company formation: $500 per company. When purchasing through a company structure, you will need to form 2 companies.
✅ Property tax is levied after the purchase. The amount depends on the cadastral value of the property.
WHAT IS INCLUDED IN OUR SERVICES
We are an official company in Sri Lanka, Sunny Mirissa Company Pvt (Ltd). I, Victoria Planterre, am its director and have been on the island since 2015. We specialize in real estate rental and sales primarily for Russian-speaking clients.
🥇 We are the first and leading provider of rental accommodation in Sri Lanka for Russian-speakers (according to Google and Yandex rankings).
👨👩👦👦 Thousands of inquiries per year, hundreds of clients 🙋♀️🙋♂️. If you become our client, we will manage your property and attract tenants for it. We offer to become the reliable partner you need on the island.
For our clients purchasing real estate, we provide comprehensive support at all stages because we are invested in your success and long-term collaboration:
✔️ Property selection;
✔️ Free legal assistance and consultations;
✔️ Presence at all stages of the transaction;
✔️ Company formation;
✔️ Provision of a Lankan partner;
✔️ Verification of property documents;
✔️ Exchange of rubles for rupees for purchase/long-term lease;
✔️ Architectural and design project;
✔️ Supervision of construction and renovation work;
✔️ Property management and priority listing in our property database;
✔️ Property oversight in your absence;
✔️ Assistance in obtaining a resident visa;
✔️ We are open to partnership in development projects.
ALGORITHM FOR WORKING WITH US
1️⃣ You send me your request via WhatsApp. Tell me what you want to buy, how, when, your budget, for what purposes, where—all your preferences.
2️⃣ I suggest suitable options from my database. We discuss them.
3️⃣ You provide your passport details, and I prepare an agency services agreement for you.
4️⃣ You pay a deposit of $200–$1,300 for our services, and we sign the real estate agency agreement. This amount will be deducted from the final commission of 5–10% (see above). At this stage, it is also advisable to initiate the creation of the companies you will need to purchase the property.
5️⃣ Next, we search for a property that you will like and that meets your goals. We provide you with 10–15 options online, including full descriptions, photos, videos, locations, and our comments.
6️⃣ You select the most suitable options. We verify the documentation for these properties.
7️⃣ You fly in, view the properties, and make your choice.
8️⃣ We open an IIA account.
9️⃣ We sign a deposit agreement, setting the date for the main transaction (which can be done without your presence). The deposit amount is set by the property owner, usually $10,000–$20,000. You are given about 2–3 months until the main transaction if needed. After this, the client returns home and arranges the money transfer to Sri Lanka.
🔟 We proceed with the main transaction.
Note: Steps 7–10 can be rearranged if necessary.
☑️ Deposit rates for starting our collaboration depend on the distance of the location where you want to buy property from our base:
- Mirissa, Matara, Weligama: $200
- Ahangama, Galle, Dikwella: $350
- Hikkaduwa, Tangalle: $500
- Colombo: $650
- East Coast: $1,300
🔥 All consultations for clients are free (legal advice and our assistance to help you quickly navigate an unfamiliar country).
🔥 Unlimited viewings. We will search until we find something you love.
🔥 Our full experience is at your disposal.
🔥 We are invested in your success and focused on long-term collaboration. If desired, by agreement, we can manage your villa or hotel.
SCHEME
Many people purchase property in the name of a company where a Sri Lankan holds 51%. They agree on terms verbally and do not prepare any additional documents. Such carelessness guarantees you problems. These range from the local partner demanding 51% of the income once the business starts, to demanding 51% of the transaction amount when selling.
There can be many schemes to secure the investor.
Our scheme to secure your investment from the Sri Lankan partner is below:
- We create Company #1. The owner of this company is the Sri Lankan. You are the Director in this company.
- We create Company #2, where 51% is owned by Company #1, and 49% is owned by you.
- Company #2 purchases the real estate.
- We prepare a share sale document from the Sri Lankan in Company #1, signed and with an open date. This allows for the silent replacement of the Sri Lankan nominee if needed.
- We prepare a Power of Attorney for you to manage the 51% share.
Thus, you maintain control over the Sri Lankan 51% share. Not a single transaction can be conducted without your consent.
Frequently Asked Questions
❓ Is there protection for the rights of a foreign investor?!
Legally, the rights are protected. In practice, I wouldn't be so sure. Because if something happens:
A Sri Lankan can always come to an agreement with another Sri Lankan. This is not available to a foreigner.
The country is very corrupt, and everything here can be bought for money. But again – only a local can make such arrangements. A white person can never be a local.
Even if the law is on your side, court cases can drag on for decades (and if there are payoffs and arrangements – indefinitely. And your lawyer is likely in on it...).
Therefore, having a reliable partner and a secure scheme is crucial. In this, you can rely on us.
❓ Does buying real estate grant residency?
No. Firstly, there is no permanent residency ("VNZH") in Sri Lanka at all. There are resident visas, issued for one year, five, or ten years. Such visas are not directly linked to purchasing real estate, except for the investor visa. An investor resident visa can only be obtained by purchasing an apartment costing more than $170,000, and not in Colombo. The money transfer and purchase must be done strictly through the official route via an IIA investment account.
❓ Can I buy real estate on a tourist visa?
Yes, exactly.
❓ How can I stay on the island legally after buying property if I can't get an investor visa?
You can stay on the island continuously on a tourist visa for up to 9 months. But if that's not enough and you want to stay longer, you can obtain a one-year resident work or business visa as you are the director of your own company. Currently, such visas are issued with difficulty to Russian speakers. But we hope the situation will change soon. This visa needs to be renewed annually at the Department of Immigration.
❓ I want to buy for flipping. Good idea?
No, it's a bad idea. The real estate market is not very active. Selling can take a long time. Sri Lankan buyers can drive a hard bargain. Selling quickly and for a higher price will be very difficult. Withdrawing money is also not simple. Given all of the above, flipping is not for Sri Lanka at the moment.
❓ Can foreigners get a mortgage or loan?
— No, local banks do not provide mortgages to foreigners. Only Sri Lankan residents and citizens with dual citizenship can arrange one.
❓ Do foreigners have to pay an additional 100% or 15% tax?
— No, there are no additional taxes for foreigners. The 15% tax on land leases was abolished back in 2016, and the 100% tax on land purchases was abolished in 2018 under the Land Act. Now, foreigners cannot buy land, only lease it.
❓ Can you calculate the profitability and payback period for an object if I rent it out?
We do not undertake to calculate this for you. I can tell you what you can realistically expect, as renting out accommodation in Sri Lanka is my main field. You can make your own calculations. I can review them at your request. But having been on the island for 10 years, I don't believe anything in life can be calculated with certainty for years ahead. Only scammers give one hundred percent guarantees. I don't like to deceive.
❓ Which type of real estate generates the highest income?
It's all quite prosaic and logical here; I'm not revealing anything new. According to our estimates, the more expensive the property, the proportionally greater the profit from it. For example, the rental income from a small villa will be less than from a 20-room hotel. It's obvious; there are no miracles, even on a miracle island.
❓ What do you think is the most liquid real estate in Sri Lanka?
Liquid real estate is property that generates good income, is in high demand for rentals, and can be sold easily and quickly. My answer is that currently, it's apartments in new complexes on the first line, costing from $400,000.
How to Transfer Money to Sri Lanka
Transferring Money To/From Sri Lanka: "White" and "Grey" Paths
Moving funds in and out of Sri Lanka can be conditionally divided into a "white" (legal) path and a "grey" path.
⬅️➡️ The "White" Path: Official with Potential Investor Status
If you are a foreign resident and want to buy real estate, the money must be transferred through a special Inward Investment Account (IIA) opened at a local bank. When you sell the property, the funds can be repatriated through the same account in the same currency they were originally deposited in.
If you already own property but the purchase funds did not go through an IIA, when withdrawing funds from the country, an annual limit of $20,000 applies. Withdrawing a larger sum is possible but requires proving the source of the funds to the bank and the Central Bank, which can take several months.
☝️ Opening an IIA account is easiest when you are physically in Sri Lanka. Any bank can open this account for you in about two hours. We assist with opening the account and accompany the client to the bank. Opening an IIA account remotely is possible but often lengthy and not always successful.
👇 Algorithm for Transferring Money to Sri Lanka for Russian Tourists (Specific established corridor)
The Embassy of Sri Lanka in Moscow initiated cooperation between the People's Bank of Sri Lanka and the National Investment and Industrial Bank (NIPB) in Russia. Since November 21, 2022, this partnership has provided Russian tourists with a convenient platform for transferring funds in Sri Lankan Rupees (LKR).
How to transfer money: Step-by-step instructions
1. Opening an account in Sri Lanka:
- Two weeks before the trip, you must open a personal account in US Dollars or Euros at the People's Bank of Sri Lanka.
- The account application form can be downloaded via this link.
- Send the completed application along with a passport scan to: fcaforrussia@peoplesbank.lk.
2. Opening an account at NIPB (Moscow):
- After confirming the account opening in Sri Lanka, the tourist must visit NIPB in Moscow to open an account in Rubles and foreign currency for the transfer.
- NIPB provides support in filling out the application for the People's Bank of Sri Lanka and sending the necessary documents, including a copy of the passport.
- Clients are offered individual terms and favorable tariffs
3. Receiving a debit card in Sri Lanka:
- Upon arrival in the country, the tourist receives a debit card that can be used for purchases and cash withdrawals in LKR at ATMs and branches of the People's Bank of Sri Lanka.
4. Closing the account or continuing to use it:
- When departing, the tourist can close the account and withdraw the balance in foreign currency.
- Alternatively, they can leave the required minimum balance ($50 USD or equivalent) and continue using the account in the future.
Additional Information:
- It is recommended to review the FAQ section on the website.
- The government allows bringing up to $45,000 in cash into the country without the need to declare the source of funds.
➡️ The "Unofficial White" Path
Without opening an IIA account, but via a bank transfer. This method is suitable for those who are sure they will not need to repatriate the funds from Sri Lanka in the future.
➡️ The "Grey" Path via Cryptocurrency Exchange
We do not recommend this option, although we can exchange money for you this way. You receive cash rupees or a rupee bank transfer. However, you will be unable to justify the origin of these funds. While some local banks might turn a blind eye and credit the funds without questions, in the future, you could face inquiries from the local tax authorities about the source of your money in Sri Lanka.
This path can be used only if you accept the risks, the amount is small, and other transfer methods are unsuitable for you for some reason.
Processing Timeframes
- The deposit agreement and the final transaction take approximately one week to complete.
- This is followed by the registration of documents and the execution of agreements with utility companies (electricity and water), which takes about 1.5 to 2 months.
Renting Out Your Property
If you wish to rent out your property during your absence from the island, you can rely on us and entrust the management of the property and its bookings to us. The property requires oversight, maintenance, and cleaning. For our services, we charge only 15-20%. The remaining net profit will be transferred to you. You will receive passive income without the associated hassles, which we will handle.
WE LOOK FORWARD TO COOPERATING!
CONTACT US ON WHATSAPP: +94763081200
Also, read our useful article: Business in Sri Lanka.
