Notes on the costs of buying property in Sri Lanka

Apart from Stamp Duty (if applicable - see below), these will likely be the major chunk of any costs you have in a real estate transaction in Sri Lanka.

Lawyers have their own fee structures and Sri Lankan firms vary (a lot!) in style and scope of work and so it’s hard to say exactly what is reasonable or ‘fair’.

Historically, many charged from 1% (on large transactions) to 2% of the total sale value. Some now have fixed fee structures and can charge separately for each part of the process - i.e. doing the initial title search, supporting in any company admin needed, drafting the relevant transfer documents etc.

The amount of work and (quite honestly) required competence of the lawyer will also vary from one transaction to the next but, as a general rule, if your lawyer is proposing a total fee more than 2% of the deal size, you’d probably do well to ask why!

Stamp Duty is payable on real estate transfers in Sri Lanka at (basically) 4%. (The first few thousand of the sale price are charged at a lesser percentage but in most cases it makes a nominal difference.)

Stamp Duty is not payable, though, currently, on share transfers. That means that if you are acquiring a ‘holding company’ for a given property, by means of a share transfer/purchase, then stamp duty will not be payable.

Going this route - if available - therefore seems attractive and may also save costs on company setup/admin (see below). Bear in mind that that advantage may be offset to some degree by the additional time/cost of suitable due diligence on the company you are effectively acquiring.

As above, if you are investing in property in Sri Lanka as a foreigner you may choose to do so using a company structure - i.e. setting up a Sri Lankan registered company in which you are a part-shareholder alongside a local trustee.

If using the right lawyer or Company Secretary this shouldn’t be a time consuming or costly process. Again, upfront fees will vary but you might expect to pay around USD 300-500 for company registration work.

Once registered, your Sri Lankan company will require some administrative upkeep - whether or not you are running cashflow through it. Several credible companies exist to undertake the necessary admin and you might allow around USD 300 a year for their support in ensuring annual returns are filed and other requirements met.

Historically, some property agents in Sri Lanka have charged sale commissions from both the seller and the buyer.

We don’t, unless actively engaged, by you, in a specific search project with a fee clearly discussed and agreed in advance.

If you’re dealing with another agent, we would recommend confirming at the earliest opportunity if there is any expectation of a fee from them in event of a sale.

If you choose to re-survey the land - and you should - then that will of course be a cost for you, though not a large one.

Again, it will depend on the size/shape of the land but a typical survey of, say, a third of an acre villa plot might cost around USD 300.

Legal fees - somewhere between 1-2% of the deal size

Stamp duty - 4% of sale value (as shown for the property). Not applicable on purchases by share transfer

Company administration costs - around USD 300-500

Agency fees - none for the buyer (in most cases!)

Surveying fees - likely around USD 300