Who Can Buy Property in Sri Lanka? Foreign Ownership Rules

The starting point: no freehold land for foreigners

The Land (Restrictions on Alienation) Act No. 38 of 2014 prohibits the transfer of land to foreign nationals, to foreign companies, and to Sri Lankan companies in which foreign shareholding is 50% or more, whether held directly or indirectly. The prohibition was applied retroactively from 1 January 2013.

For companies below that threshold, foreign shareholding must stay under 50% for at least 20 consecutive years after the transfer. If it later rises to 50% or more, the transfer can be rendered void unless the shareholding is brought back down within a prescribed period, according to Colombo law firm F.J. & G. de Saram.

Condominiums: the floor rule is gone

Until 2018, foreigners could only buy condominium units on or above the fourth floor of a building. The Land (Restrictions on Alienation) (Amendment) Act No. 21 of 2018 removed that restriction entirely: foreigners can now buy a condominium parcel registered under the Apartment Ownership Law on any floor.

The main condition is how you pay. The entire purchase price must be paid upfront through an inward foreign remittance before the deed of transfer is executed. Lawyers typically recommend routing funds through an Inward Investment Account with a licensed Sri Lankan bank, which also simplifies repatriating the proceeds when you eventually sell.

• Buy on any floor of a registered condominium building
• Pay the full price via an inward foreign remittance before the deed is signed
• Use an Inward Investment Account to bring money in and to take sale proceeds out later

Leasehold: land and villas for up to 99 years

Foreigners who want a house or land - a villa near Galle, say - normally take a long lease instead of freehold. Leases to foreigners are permitted for terms of up to 99 years. The land lease tax that the 2014 Act originally imposed on such leases was repealed by the Amendment Act No. 3 of 2017, which removed a significant cost from the leasehold route.

A registered lease is a real, enforceable interest, but it is not ownership. Check the renewal terms, whether you can assign or sublet, and what happens at the end of the term before you sign.

Who is exempt from the restrictions

The Act carves out several exemptions from the general prohibition on land transfers to foreigners.

• Sri Lankan dual citizens, who can buy land freehold
• Companies listed on the Colombo Stock Exchange (exempt from 1 April 2018)
• Diplomatic missions and certain international organisations
• Condominium parcels bought under the rules described above

Practical checks before you commit

These rules have been amended twice since 2014 and could change again, so treat any summary - including this one - as a starting point. Confirm the current position with an independent Sri Lankan lawyer, and check payment and exchange-control requirements with your bank and the Central Bank of Sri Lanka before moving money.

If you are still weighing up locations, Habio has Sri Lanka listings and area guides you can browse while you do the legal groundwork.