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Buying Property in Sri Lanka

london
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81 posts
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Buying Property in Sri Lanka

Hi Guys,

Does any one have any up to date advice on buying property in Sri Lanka. I am thinking of doing this as a rental investment with a couple of other friends, and am looking to buy an apartment in Colombo.

It will be above 5th floor so should remove this 100% tax, or so I have read. Confirmation of this would be useful?

I'd be interested to know if anyone from the Uk or overseas has done something similar to what I am proposing, and whether they were able to get a mortgage, or had to purchase the property outright? If mortgaged, what mortgage lender did you use?

Any other advice would be gratefully accepted.

Thanks in advance,

Ella

Colombo, Sri Lanka
Destination Expert
for Sri Lanka
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1. Re: Buying Property in Sri Lanka

Hi Ella,

1] Can't find a recent thread but this one

tripadvisor.com/…15054724

about still sums up the current situation.

2] As an example: anyone telling to you that apartments above 4th floor are property-tax free does not know what he's talking about or is lying explicitly.

3] No mortgages in Lanka for foreigners unless they have permanent residence visa, in our experience.

So yes, we do own a Lankan property. And no, we would not recommend that to ANY foreigner unless they can blindly trust Lankan friends/family who can sort out all details. Too many Westerners lost millions (in dollars...) by buying and building and after that loosing the property to former 'friends' chasing them out with e.g. overlapping land titles. It's already difficult enough between locals (e.g. some time back we considered an apartment in an expensive Colombo area, and our lawyer researched and concluded that all 30 apartment owners had serious risk of loosing when the owner of a disputed land title nearby would challenge their ownership); don't try it with the extra layer of risk as a foreigner.

All the best,

<Erik> & [Sandya[

london
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81 posts
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2. Re: Buying Property in Sri Lanka

Hi Erik & Sandya,

Well it wasn't mentioned to be tax free, but was mentioend as to avoid this 100% tax. I can't find the site I read that on now, but it was one offering services and support in purchasing in Lanka!

One of the people I would be buying with is Sri Lankan and I have other friends who are Sri Lankan so I am lucky in that respect. You are though still painting quite a dark picture so I will still think carefully.

You mention issue of ownership disputes which everyone has heard about across varying countries. Would this still be a potential issue on a new apartment build owned by a very large hotel chain do you think? This is something that I'd considered as a risk, but something I thought that our choice of property would escape.

Many thanks,

Ella

Colombo, Sri Lanka
Destination Expert
for Sri Lanka
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52,062 posts
176 reviews
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3. Re: Buying Property in Sri Lanka

Hi Ella,

Same. And most companies offering services and support bypassing the tax laws, e.g. with 99 years lease, have quite a shady reputation.

The apartment complex I was talking about is developed by a large company too.

An example story:

"Sunday Times of 04/03/2012:

Beachfront property sold and resold with forged deeds for Rs. 160m

Five persons, including two clerks of the Batticaloa Land Registrar’s office, have been remanded for alleged involvement in an illegal land transaction involving 14 acres of beachfront land. They are charged with using forged deeds to acquire and sell land belonging to two foreigners.

Two Swiss nationals, Hans Rudolf Burkhalter and Kurt Stoll, purchased two plots of seven acres each in Pasikudah, in the Batticaloa district, in 1979, Police told Valachchenai Magistrate A. N. M. Reyal. A caretaker was hired to look after the land, but he disappeared in 2006.

The fraud was committed in early 2009. Initially, the two plots, totalling 14 acres, were sold for Rs 400,000, and then resold for the same sum a few months later. In June last year, the two plots were sold again, this time for Rs. 30 million and Rs. 27 million to Madura Vithanage, a Western Province Provincial Council member. Five months later, the land was sold yet again for Rs. 160 million to a Colombo-based company involved in tourism.

The suspects are A. E. Saminathan (Notary Public); Mohammed Hakeem; (the person involved in the transaction); Mohammed Amanullah (Grama Sevaka and assistant to the Notary Public); Kumarasamy Manikkawasagar (employee of the Land Registrar); and Muthah Logeshwaran (employee of the Land Registrar).

Attorney-at-Law and retired Deputy Inspector General of Police, Jayakumar Thangavelu, appeared for the two Swiss nationals. "

All the best,

<Erik> & [Sandya]

Ahungalla, Sri Lanka
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for Sri Lanka, Kalutara, Ahungalla
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4. Re: Buying Property in Sri Lanka

Hi there...

Would agree with Erik on buying properties in SL, a VERY risky business indeed !, you should also take note of what the British Foriegn Office has to say about this, it is NOT easy, and so open to downfalls !!

Be CAREFUL !!

Regards

Dave

Edited: 03 May 2012, 15:15
Brisbane
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5. Re: Buying Property in Sri Lanka

Ella

I strongly advise you NOT to buy a property in SL. I do own a property there and do not expect that I will ever recover the money invested. All the above advice is right on the mark.

When in a Kandy hotel, I saw and heard an agent wooing European potential investors and could barely restrain myself from butting in and saying DON'T do it.

Very sensible of you to seek opinions.

Archi

Agra, India
2 posts
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6. Re: Buying Property in Sri Lanka

Hi Everybody,

Can u please share with me the contact details of the legal professional u hire to do the due diligence of the property in Colombo.

Just going to lanka at month end to close this small deal.

ANy help wud be great....

cheers....chits

Colombo, Sri Lanka
Destination Expert
for Sri Lanka
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52,062 posts
176 reviews
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7. Re: Buying Property in Sri Lanka

Hi Ksitihz,

No I won't. Better first explain, by PM if you like, what precautions you have taken further before embarking on this plan against all earlier advice in the forum. If we feel convinced you did your homework we might recommend you a good lawyer for the propety check, but if you have no good preparation adding a good legal round is useless and could only damage their reputation. Sorry...

All the best,

<Erik> & [Sandya]

london
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81 posts
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8. Re: Buying Property in Sri Lanka

Everyone, thank you so much for your advice. I would so love to own a property in Sri Lanka but I think that your warnings plus the difficulties faced in getting a mortgage and the fact i don't think i could ever be completely confident that i was actually going to end up owning the property mean its unlikely.

I will still look into things further but im not holding out much hope of me ending up feeling confident enough to go through with it. Thanks for all your advice.

Ella

Agra, India
2 posts
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9. Re: Buying Property in Sri Lanka

Hi <Erik> & [Sandya]

I am from India, and we are basically buying a commercial property in SL.

Our due diligence is in place as the probable tenant is world class MNC.

I just want to second the opinion of my Attorney Journal on the title of the property.

Regards, chits

Colombo, Sri Lanka
Destination Expert
for Sri Lanka
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10. Re: Buying Property in Sri Lanka

Hi Chits,

See the rest of the thread: does not seem like very proper due diligence to us, frauds in Lanka are far above the Indian level. All the best anyway,

<Erik> & [Sandya]