Can Foreigners Own Land in Sri Lanka? The Current Position

"Foreigners cannot buy land in Sri Lanka" is the answer most buyers hear, and it is close enough to true to be the safe default. It is also not the complete picture. The Land (Restrictions on Alienation) Act, No. 38 of 2014 blocks a foreign individual from acquiring land directly, but the same Act carves out real, legally used routes through company structures and specific project categories, each with its own conditions that determine whether a specific transaction is actually available to a specific buyer.

A foreign national, a foreign company, or a Sri Lankan-incorporated company with foreign shareholding of 50% or more is barred from acquiring land and buildings in Sri Lanka, a restriction that has applied since 1 January 2013 under the framework the 2014 Act later consolidated. Owning Property in Sri Lanka as a Foreigner: The Complete Guide covers where this restriction sits inside the wider ownership picture, condominiums bought outright, land only leased; this piece goes further into the land-specific exceptions the general overview does not have room for.

A foreign national can acquire land through a company incorporated in Sri Lanka, provided the foreign shareholding in that company stays below 50%. This is the most commonly used legitimate route for a foreign investor who wants land-holding capacity without going through the listed-company or Strategic Development Project categories described below, and its central condition is exactly the one that trips up the workaround structures covered elsewhere: keep foreign ownership under half, genuinely, not on paper while control sits elsewhere through a side agreement. Nominee Ownership Structures and Why They Fail covers what happens when a structure is dressed up to look like this route while actually functioning as majority foreign control underneath, which is a different, non-compliant thing from a genuine minority-shareholding company.

Since 1 April 2018, a transfer of land to a company with more than 50% foreign shareholding is permitted specifically where that company is listed on the Colombo Stock Exchange. This route inverts the usual 50% cap: rather than requiring foreign ownership to stay below half, it permits majority or even full foreign ownership, on the condition that the company is a publicly listed entity subject to the exchange's own disclosure and governance requirements. It is a narrower route in practice than the minority-shareholding company above, since it requires an actual listing, but it is available to a foreign investor structuring a larger acquisition through a public vehicle rather than a private one.

The Act gives the relevant Minister, acting with the Minister of Lands and Cabinet approval, the power to exempt a foreign entity from the land restriction entirely where that entity is engaged in a project recognised as a Strategic Development Project under Sri Lanka's Strategic Development Projects Act, or where it is a foreign company engaged in international commercial operations of a kind the Act recognises. This is a discretionary, case-specific exemption rather than a standing rule available to any buyer who applies, and it functions in practice as a route for large-scale investment projects that clear a specific government approval process, not as an option for an individual buyer purchasing a single property.

None of the three routes above changes the separate condominium exemption: a foreign individual can still buy a condominium parcel outright, on any floor, provided the full purchase price arrives via inward remittance before the deed of transfer, regardless of which of the land-specific routes might otherwise apply to a company structure. A buyer choosing between a condominium purchased directly and land acquired through one of the company routes above is choosing between two entirely different mechanisms, not two prices for the same thing.

Take a hypothetical Sri Lankan-incorporated company set up to hold a specific parcel of land, with 1,000 shares issued in total, numbers chosen only to make the threshold concrete rather than a claim about any specific structure. At 490 shares held by foreign investors and 510 held by Sri Lankan nationals, the company sits at 49% foreign shareholding and qualifies under the minority-shareholding route. Issue 40 more shares to a foreign investor without a corresponding increase on the Sri Lankan side, and the company crosses to 530 foreign out of 1,040, just over 50%, and the same company that was compliant a week earlier no longer is. Share transfers, new share issuances, and even a shareholder's own change in nationality or residency status can each move a company across this line without anyone involved necessarily intending a change in the company's land-holding eligibility, which is exactly why the shareholding register needs checking at the time of the transaction rather than trusted from whenever the company was originally incorporated.

Across every route examined here except the listed-company exception, the practical question is not whether a foreigner is involved, it is how much of the relevant company's shareholding is foreign. A structure at 49% foreign shareholding is compliant; the identical structure at 51% is not, and the difference is not a matter of degree, it is the line the entire restriction turns on. Confirming a specific company's actual, current shareholding percentage, not the percentage described in an offering document from when the structure was first set up, is the verification step that matters most before relying on the minority-shareholding route for any purchase.

Identify which of the three routes, minority-shareholding company, CSE-listed majority-foreign company, or ministerial Strategic Development Project exemption, actually fits a specific transaction before assuming land is simply unavailable or, at the other extreme, assuming any company wrapper solves the problem. Verify the actual current foreign shareholding percentage of any company being used for this purpose directly, rather than relying on a structure's original design intent from years earlier. Due Diligence When Buying Property in Another Country covers the verification habits worth applying to any of these structures before committing.

Sri Lankan Property Taxes and Transfer Costs for Foreigners and Title Verification and the Sri Lankan Land Registry cover the practical steps that follow once a route is chosen, and The 99-Year Lease Route in Sri Lanka covers the alternative available to a buyer for whom none of the three company-based routes above is a realistic fit. Can Foreigners Own Property Abroad? Freehold, Leasehold and Use Rights covers how Sri Lanka's layered system compares to Hak Milik, Hak Pakai and HGB: The Three Titles That Matter and Freehold and Leasehold Zones in Dubai: Where Foreigners Can Buy, two markets that solve the same foreign-land question through zone designation and use-rights rather than a shareholding threshold.

Whatever the destination inside the country, Sri Lanka covers a wide enough range of markets that these same three routes apply uniformly, from the south coast to Colombo's own commercial districts, and the same holds across Thailand and Dubai, where a different national framework applies just as uniformly within each country.

• Land (Restrictions on Alienation) Act No. 38 of 2014: the general restriction and the minority-shareholding company exception.pdf)
• The Colombo Stock Exchange-listed company exception, effective 1 April 2018, and the Strategic Development Project ministerial exemption
• The condominium exemption operating independently of the land-specific company routes