Frequently Asked Questions

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HOW TO BUY PROPERTY IN SRI LANKA ?

  • Online searches, the property pages in Sri Lankan newspapers and reputed agents are the most effective ways of finding your dream property in Sri Lanka.
  • Leading local agents have their own website listings and offer a full service including assistance with introductions to lawyers and banks.
  • The property section in Sri Lanka’s Sunday Times is also a popular local source.
  • Lawyers play a key role and appointing an experienced lawyer is an essential early step.

 Identifying and appointing an immigration consultant to assist with resident visa Once you have identified the desired property, your lawyer;

1) Should help negotiate a preliminary contract (Sale & Purchase Agreement)

2) Should commence the legal due diligence on the property, and, if you are a foreigner,

2.1) could help set up the company through which the purchase would be made

2.2) could help set up the company bank account through which the purchase would be funded

This work is generally done in parallel and the entire process typically takes four to six weeks.

Overseas buyers are recommended to set up local bank accounts in Sri Lanka, to

(i) Pay for the property purchase and

(ii) An account for day-to-day living.

Account opening is relatively straight-forward and your lawyer can assist with this – the process involves the usual identification checks, proof of permanent address etc

That are required in most countries.

If the property is to be purchased through a company, the bank account should be in the company’s name and your lawyer can assist with this.

Inward Investment Account (“IIA”, also known as a Securities Investment Account “SIA”): Sri Lanka has a special category of bank account catering for investments including in property.

Investing into Sri Lanka via an IIA simplifies the remittances of funds back overseas, including property rental income and proceeds from any future sale of the property.

International banks including Standard Chartered Bank and leading local private banks like Commercial Bank, NationsTrust Bank, and Seylan Bank offer these accounts, online and telephone banking facilities and extensive branch and ATM networks.

New property developments are typically sold “off the scheme”, allowing buyers to pay in installments linked to a pre-defined schedule.

Payment for existing properties typically involves a lump sum payment, made at the time that ownership is transferred.

Bank financing for property purchases is generally restricted to Sri Lanka citizens / dual citizens, but some banks may lend to property-owning companies with foreign shareholders.

The SP&A contains the terms and conditions under which the purchase would be completed;

 

Terms and conditions governing the deposit: It is customary to pay a deposit to the seller’s lawyer at the time of signing the S&PA

 

The S&PA should clearly list the circumstances under which you or the seller can terminate the SP&A without forfeiting the deposit.

For example, if there is a problem obtaining planning permissions and certification, where the purchase involves a new construction.

If you withdraw and fail to complete the transaction for reasons other than those listed, you may be considered in breach of the SP&A and may forfeit the deposit.

 

Likewise, if the seller fails to complete for reasons not listed in the SP&A, the seller may be required to return the deposit and sometimes, a pre-agreed penalty payment. All these details should be clearly documented in the S&PA.

For new developments, the S&PA is often a standardized document, prepared by the seller’s lawyer and provided free of charge to buyers.

 

You would generally sign the S&PA at the same venue together with seller, in the presence of the respective lawyers.

Proof of payment of local rates and taxes

 

Your lawyer would check the validity of these documents.

Your lawyer typically does not visit the property as part of the legal checks, but this can be included if requested.

 

If not undertaken by the lawyer, it would be up to you or your estate agent or representative to ensure that the property and buildings at the site confirm with the building certification and that there are no structures apart from those on the approved building plans 

(eg. an unapproved swimming pool or additional building).

 

These legal checks typically take four to six weeks.

Ownership and title is transferred via a Deed of Transfer (“DOT”).For new developments, the DOT is often a standardized template document prepared by the seller’s lawyer and provided free of charge to buyers.

 

The seller also arranges for an updated survey plan that is attached to the documents when applying for registration of the new title.

 

The change of ownership is notarized by a public notary and registered at the land registry. Often, the buyer’s lawyer or seller’s lawyer may also be a public notary and perform this service without involving a third party notary.

You are generally not required to attend the signing of the DOT – only the seller signs the title transfer documents, in the presence of the respective lawyers.

 

Your lawyer would hand over the balance of the purchase payment, estate agent’s fees (and if applicable, a notary fee), in exchange for taking possession of your keys and the title documents to your new property.

 

Your lawyer should register the DOT at the local land registry and also notify the local council or municipality of the change of ownership. You receive a certificate of ownership once the registration is completed.

 

 

Legal

 Title Deed

Survey Plan

Ownership history

Proof of lack of legal disputes affecting the property

If the property includes existing buildings; the Building Certificates,Street Line Certificates and Certificates of Conformity

Proof of payment of local rates and taxes

Your lawyer would check the validity of these documents.

Your lawyer typically does not visit the property as part of the legal checks, but this can be included if requested.

If not undertaken by the lawyer, it would be up to you or your estate agent or representative to ensure that the property and buildings at the site confirm with the building certification and that there are no structures apart from those on the approved building plans 

(eg. an unapproved swimming pool or additional building).

These legal checks typically take four to six weeks.

Ownership and title is transferred via a Deed of Transfer (“DOT”).For new developments, the DOT is often a standardized template document prepared by the seller’s lawyer and provided free of charge to buyers.

The seller also arranges for an updated survey plan that is attached to the documents when applying for registration of the new title.

The change of ownership is notarized by a public notary and registered at the land registry. Often, the buyer’s lawyer or seller’s lawyer may also be a public notary and perform this service without involving a third party notary.

You are generally not required to attend the signing of the DOT – only the seller signs the title transfer documents, in the presence of the respective lawyers.

Your lawyer would hand over the balance of the purchase payment, estate agent’s fees (and if applicable, a notary fee), in exchange for taking possession of your keys and the title documents to your new property.

Your lawyer should register the DOT at the local land registry and also notify the local council or municipality of the change of ownership. You receive a certificate of ownership once the registration is completed.

 

A good lawyer is integral to the success of your purchase.

Several leading lawyers in Sri Lanka specialize in providinglegal services to foreign property buyers and it is advisable that you workwith one of them.

We have briefed many leading lawyers about Catalina and wouldbe happy to refer any of them on request.

 

Typically 1% to 3% of the property value - The costs of the buyers and seller’s lawyers attending To conveyancing are generally split equally between the buyer and seller.

Stamp Duty - Done by a government assessor, organized by your lawyer.

Real Estate Agent’s Fee - Typically 3% to 5% of property value - Generally paid by the seller A buyer’s fee may apply if an agent acts as a buying agent.It is advisable to clarify at the outset whether the seller, buyer or both parties are liable for an agents ‘fee

 

 

Stamp Duty -4% of assessed value of property At transfer of title/commencement of ownership, paid to the relevant provincial council.

VAT - 15% of item or service At the time of transaction, levied on many items and services including property .

Nation Building Tax (NBT) -  2% of item or service Generally accompanies VAT-eligible items or services

Council Rates - Scaled up to 24% of profits and income generated by a resident Paid to the Department of Inland Revenue (central government). Interest income is generally collected as source, as a Withholding Tax

Capital Gains Tax - 10% of the gain on the sale of property. Not applicable if property ownership is via a company and ownership transferred via sale of shares in that company Paid to central government. Incurred when property sold.

 

Sri Lankan law currently restricts foreigners’ freehold purchases of land and non-apartment property through Sri Lanka incorporated companies, which have at least 51% of shareholders who are Sri Lankan citizens (or dual citizens).

Non-Sri Lankans are currently required to purchase freehold property (except apartments) through a well-established structure, via a locally incorporated

Company especially set up for them by their lawyer. The structure has several features to safeguard the buyers’ complete control and interests.

Typically, the foreign investor owns 49% of the property holding company and a local Trustee owns 51%, but grants all legal powers and custody of the 51% shareholding to the foreign investor.

Foreigners purchasing property through their 49% owned, locally-incorporated company may also enjoy tax advantages on rental income and capital gains.

A foreign buyer will incur the costs of setting up a local company for the purchase. This could range from USD2,000 to USD5,000, depending on the lawyer.

The Sri Lanka government has announced its intention to liberalise the laws that currently restricts non-Sri Lankan individuals’ direct ownership of freehold land and non-apartment property.

COLOMBO

An apartment development boom in response to very significant price appreciation over the past decade is changing the Colombo skyline. Some commentators have cautioned about a potential correction in this market segment and the Central Bank is taking steps to steady this rate of growth.

GALLE

Ease of access to Galle and the south since the construction of the Southern Highway, along with Galle’s popularity as a major tourist hub, has caused a very significant appreciation in prices, particularly for the quaint Dutch-style homes and buildings in and around the historic Dutch fort. Properties in the coastal belt around Galle have become very popular with expatriates and foreigners seeking second homes, holiday homes or relocating for retirement. In response to this demand, several developers have commenced apartment developments in the area.

KANDY

The historic and cultural capital of Sri Lanka is experiencing growth in demand for tightly-held parcels of land and homes around the picturesque center. The Colombo-Kandy Highway, targeted for completion in 2020, may further intensify this demand, similar to the boom underway in southern Sri Lanka Like in Galle, several developers have started apartment developments in Kandy.

Admin Management

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Risus integer torquent ultricies magna est euismod cubilia eu, sociosqu taciti justo facilisis mi lectus rhoncus, posuere duis aliquet etiam dolor ligula placerat.sagittis viverra lorem luctus cras nec.
Risus integer torquent ultricies magna est euismod cubilia eu, sociosqu taciti justo facilisis mi lectus rhoncus, posuere duis aliquet etiam dolor ligula placerat.sagittis viverra lorem luctus cras nec.
Risus integer torquent ultricies magna est euismod cubilia eu, sociosqu taciti justo facilisis mi lectus rhoncus, posuere duis aliquet etiam dolor ligula placerat.sagittis viverra lorem luctus cras nec.
Risus integer torquent ultricies magna est euismod cubilia eu, sociosqu taciti justo facilisis mi lectus rhoncus, posuere duis aliquet etiam dolor ligula placerat.sagittis viverra lorem luctus cras nec.
Risus integer torquent ultricies magna est euismod cubilia eu, sociosqu taciti justo facilisis mi lectus rhoncus, posuere duis aliquet etiam dolor ligula placerat.sagittis viverra lorem luctus cras nec.

Technical

Risus integer torquent ultricies magna est euismod cubilia eu, sociosqu taciti justo facilisis mi lectus rhoncus, posuere duis aliquet etiam dolor ligula placerat.sagittis viverra lorem luctus cras nec.
Risus integer torquent ultricies magna est euismod cubilia eu, sociosqu taciti justo facilisis mi lectus rhoncus, posuere duis aliquet etiam dolor ligula placerat.sagittis viverra lorem luctus cras nec.
Risus integer torquent ultricies magna est euismod cubilia eu, sociosqu taciti justo facilisis mi lectus rhoncus, posuere duis aliquet etiam dolor ligula placerat.sagittis viverra lorem luctus cras nec.
Risus integer torquent ultricies magna est euismod cubilia eu, sociosqu taciti justo facilisis mi lectus rhoncus, posuere duis aliquet etiam dolor ligula placerat.sagittis viverra lorem luctus cras nec.
Risus integer torquent ultricies magna est euismod cubilia eu, sociosqu taciti justo facilisis mi lectus rhoncus, posuere duis aliquet etiam dolor ligula placerat.sagittis viverra lorem luctus cras nec.
Risus integer torquent ultricies magna est euismod cubilia eu, sociosqu taciti justo facilisis mi lectus rhoncus, posuere duis aliquet etiam dolor ligula placerat.sagittis viverra lorem luctus cras nec.