Our Sri Lankan office led by Ajithaa Edirimane will help foreign buyers through the buying process and with the help of each project’s dedicated legal and accounting firms.
In addition, Avrille and her team can help you with the following administrative and logistical processes:
- Arranging finance (up to 65% mortgage) for foreign buyers (we normally charge 900USD to help with the paperwork, arrange singing & accompany buyers to meet the bank manager)
- Exchanging currency
- Furnishing your apartment
- Recommending insurance
- Finding and facilitating storage of your possessions in between your stays on the island
- Advice on visas
- Transportation and tours
- Health/finding a local doctor
- Opening IIA & local bank account
- Any other professional services
Some of these services can take up considerable time to manage and complete and therefore in some circumstances, we offer a paid concierge service to ensure your requirements and tasks are completed efficiently.
What are the rules and regulations for foreigners buying and renting property in Sri Lanka?
Foreign nationals can buy freehold condominium properties as freehold properties in Sri Lanka and qualify for a 5 or 10 year visa when they buy.
With its diverse geographical landscape, Sri Lanka is an attractive destination for real estate investment.
The country offers stable and enjoyable weather, an affordable cost of living, and the welcoming nature of its amiable people, along with reliable air transportation, making it an ideal location for living and holidays.
Our team on ground will be your single point of contact in choosing a Legal Counsel (we work closely with Lanka’s leading Condominium Law expert Ajithaa Edirimane and law firm De Saram) , opening the required bank accounts and advising you of the appropriate banking channels, as well as guiding you through the execution of the deed of transfer.
Step by Step Process:
- Identify Property of your choice for acquisition via Kristall Spaces website https://property-srilanka.com/
- Due Diligence – conducted by Kristall Spaces Lanka or buyer visiting Sri Lanka
- Reservation of Property and initial Booking paperwork to be completed
- Opening of Bank Accounts in Sri Lanka and wiring funds; retaining Lawyers for paperwork; consultation with Tax Professionals (if needed)
- Execution and Signing of Agreements & Transfer of funds
- Rental options – to be discussed with developers who would promote the rental of the property in the absence of the owner.
Rates and Taxes:
- Stamp Duty – 4% of property value
- VAT – 18% of property value
- Social Security Contribution Levy (SSCL): 2.5%
- Capital Gains Tax – 10% on the gain earned when selling the property.
Capital Gains Tax
The Capital Gains Tax of 10% on profits will take effect on April 1, 2018. This flat 10% rate will apply regardless of how long assets are owned. The tax affects both foreigners and citizens selling assets in Sri Lanka. For assets owned before April 1, 2018, their value will be calculated as of September 30, 2017. Gains under Rs. 50,000 are exempt, as are sales of a primary residence occupied for 2 of the last 3 years. Those who renounce residency to become Sri Lankan residents must pay the tax on investment properties in their former home country.
Other frequently asked questions:
Are these properties ownership freehold? Yes. Sri Lankan Nationals and Foreigners will obtain a freehold title.
What are the anticipated maintenance services charges per square foot? The charges may vary from $0.15 to $0.25 per Sqft but USD 115 per month for a one bedroom unit can be expected.
What is the projected capital growth? Beachfront real estate prices have risen 84% in Sri Lanka over the past 5 years. Past increases do not guarantee future performance, but all indicators suggest that this trend will continue.
Can foreigners purchase apartments? Foreigners can purchase apartments and require an Inward Investment Account (IIA) to be opened in any bank in Sri Lanka in order to bring-in funds. This is vital as all investment brought into Sri Lanka can be taken out via the same channel including capital gains in the event of a sale.
Can I transfer funds directly from my account to the seller? Only if it originates from Sri Lanka. Any transfers originating from overseas must be first transferred to the IIA account and thereafter transferred to the seller.
Can I pay for my apartment using cash? Cash transactions are not accepted. Only bank-to-bank transfers.
Do I require a lawyer? Yes. The legal team / lawyer must be based in Sri Lanka. If you do not have legal representation, we can recommend some. A lawyer is required to sign the Sales & Purchase Agreement and at the time the Deeds are being transferred.
Who will manage the apartment rentals on my behalf? There are a number of established operators who can look after your apartment and manage the rental business for you including generating and managing rental guests and housekeeping.
What is the projected average occupancy when the building is completed? Occupancy varies but according to the Sri Lanka Tourism Development Authority (SLTDA), prior to 2019, the Southern Coast area maintained a steady hotel occupancy rate of over 70%.
What are the projected yields from rental? Projected yields vary for each project but typically 6% and upwards is achievable, however, this is not guaranteed and will depend on the type of rental agreement and tourist arrivals.
