The 99-year lease in Sri Lanka explained

How does a 99-year lease work in Sri Lanka?

The landowner (lessor) keeps the freehold. You (the lessee) get exclusive possession for a fixed term of up to 99 years. On the south coast the whole rent is usually paid upfront as a single premium, with a nominal annual rent thereafter, so it feels like a purchase. Legally it is not: the term runs down from the day you sign, and the land reverts to the lessor at the end.

The lease deed should state, at minimum: the term and start date; the premium and any rent; your right to build, and who owns the buildings during and after the term; your right to assign (sell), sublet and mortgage without the lessor's consent; what happens if the lessor sells or dies; and a dispute mechanism. Anything not written in is not a right you have.

How is a 99-year lease registered?

The lease is executed before a notary with two witnesses and registered at the Land Registry (Galle or Matara for most south-coast plots). Registration protects you against a later sale or a second lease of the same land. Insist on the registered copy, not just the signed one.

Before signing, your lawyer runs the same 30-year title search as for a purchase. A perfect lease over defective title is worthless. See the 8-step buying guide.

What tax and stamp duty do you pay on a 99-year lease?

• Land lease tax: none. The 2014 Act imposed a 15% tax on the total rent of leases to foreigners. Amendment Act No. 3 of 2017 abolished it for leases executed from 1 January 2016 onward.
• Stamp duty: 2% (Rs 20 per Rs 1,000) of the aggregate rent, doubled from 1% on 1 April 2025 under the Stamp Duty (Special Provisions) Act No. 12 of 2006. Whether duty is still capped at 20 years' rent for longer leases must be confirmed with your lawyer. How this cap applies to a single upfront premium depends on how the deed is drafted; confirm with your lawyer.
• Legal fees of roughly 1% to 2% of the premium, plus survey and registration costs. Full breakdown in our cost guide.

What are the risks of a 99-year lease?

A depreciating asset. A lease with 70 years left is worth less than one with 99. Resale buyers discount accordingly.

Lessor risk. If the lessor has a mortgage, or heirs who dispute the lease, you inherit the problem. Check for encumbrances and have all co-owners sign.

Improvements. If the deed is silent, buildings you pay for belong to the land, and therefore to the lessor, at expiry.

Can a 99-year lease be renewed?

There is no statutory right of renewal, and Section 5 caps tenure at 99 years. "99 + 99" options are commonly offered. We know of no Sri Lankan ruling on whether a renewal option that would take total tenure past the cap can be enforced, so treat a renewal clause as a hope, not a right, and confirm with your lawyer. At expiry the land, and usually the buildings, revert to the lessor or their successors; a new lease is a fresh negotiation under whatever law then applies.

Frequently asked questions

Can I sell my lease?

Yes, if the deed allows assignment. You assign the remaining term to a new lessee, foreign or Sri Lankan, for whatever the market pays. The assignment is itself a registrable deed and attracts stamp duty. Most foreign-owned villas on the south coast change hands this way.

Can I get a mortgage on a leasehold?

Rarely. Sri Lankan banks lend to foreigners on leaseholds only in limited cases, and foreign banks will not take Sri Lankan land as security. Plan to fund the premium in cash, remitted through a bank account in your name so the inward remittance is documented.

Is a lease safer than a company structure?

Different risks. A lease is legally clean and registrable but finite. A company with under 50% foreign shareholding holds freehold but depends on a Sri Lankan majority shareholder for 20 years. Most buyers prefer the lease for its simplicity. Start with can a foreigner buy land in Sri Lanka.

General information, not legal advice. Laws and rates change; confirm every point with your own Sri Lankan lawyer before you pay a deposit.