Sri Lanka has experienced a condominium boom, especially in the luxury sector. New launches are daily expected. There was 35% increase in the number of condominium certificates issued in 2007, compared to the previous year, according to the Condominium Management Authority, a private sector group.
Middle-range three-bedroom apartments in Colombo are going for LKR 30-35 million (US$550,000), when a year ago they were LKR 20 million-25 million (US$465,000-$510,000), according to local industry sources.
The first phase of the ‘condominium boom’ was driven by Sri Lankans living overseas, after the implementation of the ceasefire agreement in 2001. But in 2006, the cease-fire collapsed. The conflict escalated. But while the market has lost its spectacular momentum, values have remained high.
Buying a Property
Foreigners can freely buy properties as long as they are willing to pay the Land Tax for foreigners at 100% of the property value. An alternative is to lease the land for 99 years, bringing the tax down to 7%.
When buying property, it is important to hire a lawyer, who will prepare the contract. No sale is considered final without the legal transfer of ownership from seller to the buyer.
The legal owner of the property is the only one allowed to sell his property; in cases where a more than one person is considered the legal owners of the land each owner should agree to the sale. In most cases, an estate agency would ensure the ownership of the property even before the public offering. The deed of ownership must be checked by the lawyer in the Land Registry.
Both parties sign the transfer contract in the presence of the lawyer. The buyer also makes the full payment. Transfer is considered valid from the moment of signature by both parties. After which, the lawyer then registers the property in the buyer’s name.
All property transactions are done in cash, in rupee. Most locals do not accept cash cheques or money transfers.
In cases where you do not have enough money to purchase the property at once, most locals accept advance deposits for the property. It is expected that the deposit would amount to 10% - 20 % of the property’s value. Money to pay for the deposit can be secured by a lawyer, trustee or other middleman. The shorter the period between advance and final buy the better. It is advisable to be in Sri Lanka for the final buy. Being in Sri Lanka saves additional lawyer’s fees, who need to hold a power of attorney issued by the buyer to legally finalize the sale in cases where the buyer is not present.
Stamp Duty is LKR 3,000 (US$29) for the first LKR 10,000 (US$962) of the buying price, and LKR 4,000 (US$38) for each additional LKR 100,000 (US$962).
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