How to Buy Property On Sri Lanka’s South Coast

Foreigners cannot directly own freehold land in Sri Lanka. However, there are several legal and secure structures that allow you to invest, build, or live long-term on your own property:

• Company ownership:
  A Sri Lankan company can buy freehold land if at least 51% is locally owned. Many foreign investors partner with trusted Sri Lankan shareholders for joint ventures or boutique hotel developments. This is the most common and straightforward structure for individuals purchasing villas or plots.

• Leasehold ownership:
  Foreigners can lease land for up to 99 years in their own name.

• Buying an apartment:
  Foreigners can directly purchase condominium units (apartments) in approved developments above the 4th floor, under the Condominium Act. No lease structure is required for these.

Buying property in Sri Lanka as a foreigner requires a few key administrative steps before you can officially complete the purchase. While the process is straightforward, it takes a bit of time and local coordination.

Here’s what to expect:

1. Set up a local company
   To buy property as a foreigner, you’ll first need to incorporate a Sri Lankan company. This company will hold the property lease or ownership. Your lawyer or company secretary can register it on your behalf, and you’ll be listed as a director and shareholder.
   The process usually takes 2–3 weeks.

2. Open local bank accounts
   Once your company is registered, you’ll open a local business bank account and an Inward Investment Account (IIA).
   The IIA is required for bringing funds legally into Sri Lanka for property purchases, ensuring your investment is registered with the Central Bank.
   Setting up both accounts and clearing compliance checks can take up to six weeks in total.

3. Sign a pre-sale agreement (optional)
   While your paperwork and accounts are being set up, your lawyer can prepare a Pre-Sale or Reservation Agreement.
   This document secures the property for you and allows the seller to hold it off the market while you complete the necessary steps.
   
   A small holding fee is usually agreed upon at this stage, which is later deducted from the purchase price.

4. Complete due diligence and final sale
   While your company and bank accounts are being set up, your lawyer will complete title verification, survey checks, and the sale deed. This includes:

   • Verifying the title deed and ownership history

   • Checking survey plans and boundaries

   • Confirming access roads and right of way

   • Ensuring there are no encumbrances or disputes

   This step protects you from hidden legal issues and ensures the land is clear and transferable.

5. Sign the Purchase Agreement

   You and the seller meet the licensed notary to execute the Transfer Deed.

   Full purchase price is usually paid, as well as stamp duty, notary and registration fees settled at this point (your lawyer/notary coordinates this).

   The notary lodges and registers the deed at the Land Registry in your company’s name.

Yes. You can build, renovate, or operate a business (like a villa, café, or boutique hotel) on leased land, provided the lease agreement gives development rights.

All construction plans must be approved by the local Pradeshiya Sabha (council), and you’ll need a building permit before starting.

While the south coast stretches for over 100 km, a few regions stand out for foreign buyers:

• Ahangama: Surf breaks, café culture, and boutique hotels; ideal for lifestyle investors.

• Weligama: More developed, good for serviced apartments and business ventures.

• Midigama & Kabalana: Fast-rising coastal pockets with sea views and walking access to the beach.

• Galle & Unawatuna: Colonial charm and historical value, perfect for high-end villas and guesthouses.

• Koggala & Kathaluwa: Quiet, lake-side land surrounded by nature—excellent for sustainable builds.

Currently, foreign buyers must pay in full, as local banks don’t offer mortgages to non-residents.
Most investors bring funds from abroad or structure payments through a Sri Lankan company account.