Sri Lanka restricts freehold land ownership by foreigners, but long leases and apartments remain open. A clear guide to the Land (Restrictions on Alienation) Act and the practical options.
"Can I buy land in Sri Lanka?" is one of the first questions foreign investors ask. The short answer is: not freehold, in most cases — but you can secure land through long leases, and you can buy apartments. Here is how the rules work.
The rule: no freehold transfers to foreigners
The Land (Restrictions on Alienation) Act, No. 38 of 2014 prohibits the transfer of freehold land to:
- foreign nationals
- foreign companies
- Sri Lankan companies in which foreign shareholding is 50% or more, whether held directly or indirectly
The restriction applies to transfers made from 1 January 2013.
For companies, the threshold is important. A Sri Lankan company with foreign shareholding below 50% can own land, but the law is designed to prevent structures that later push foreign ownership over the line. This is an area where careful legal structuring is essential.
The main alternative: long-term leases
Foreigners and foreign-controlled companies can lease land. Leases of up to 99 years are possible. A lease tax that previously applied to leases to foreigners was removed in 2017, which made leasing considerably more attractive. Today, most foreign investors — for resorts, factories and homes — use long leases rather than freehold.
State land is also available in some sectors. For example, Sri Lanka's tourism authority now lists development land through an online land bank, with many state-owned plots offered on 33-year leases.
Apartments and condominiums
Foreigners can buy condominium units, such as apartments in registered condominium developments, provided the full purchase price is paid upfront through an inward foreign remittance. This is the most common route for foreigners buying residential property in Colombo.
Exemptions
The Act and its later amendments provide limited exemptions — for example, for diplomatic missions, for projects approved as Strategic Development Projects, and for companies listed on the Colombo Stock Exchange that meet the relevant conditions. These are specialist routes and apply case by case.
Other points to know
- Mortgage restriction. Land transferred to foreigners or foreign-controlled companies after 29 October 2014 cannot be mortgaged to a bank for five years.
- Title due diligence is critical. Land title in Sri Lanka can be complex. Always have title traced over at least 30 years, check survey plans against the ground, and confirm there are no competing claims or state interests.
- Planning and zoning. Check what you are allowed to build before you commit — especially in coastal zones, which have their own setback and permit rules.
Choosing the right route
- Build a hotel, factory or office → a long lease (up to 99 years) held by your Sri Lankan company, possibly with BOI approval
- Buy a home in Colombo → a condominium apartment, paid through an inward foreign remittance
- A joint project with a Sri Lankan partner → land held by a company with foreign shareholding below 50%, carefully structured
- A very large strategic project → explore the Strategic Development Projects route
How Arwa Lanka helps
We help investors find sites, run title and planning due diligence, negotiate leases and structure ownership correctly from day one. Contact us to discuss a specific property or project.
This article is general information and not legal advice. Property transactions require advice from a qualified Sri Lankan lawyer.
Sources: Land (Restrictions on Alienation) Act No. 38 of 2014 · F.J. & G. de Saram — Foreign ownership of property in Sri Lanka · Daily FT — SLTDA opens tourism land bank (June 2025)