Jolt for Sri Lanka's condo market
Sri Lanka's expanding condominium (condo) market has been thrown into disarray and confusion following new rules barring the sale of private land to foreigners, industry officials say.
The rule, based on an announcement in the Budget 2013 by President Mahinda Rajapaksa, comes in the backdrop of concern that prime properties bought by foreigners are rapidly depleted the land resources. Chairman of the state-owned Condominium Authority Kapila Gamage conceded that there is confusion at the moment with regard to the sale of condos as a result of a letter sent by the Treasury to the Commissioner General of Lands directing him not to registrar land deed transfers including condominiums of foreigners with effect from January 1st in accordance with the budget proposal.
The Commissioner General has issued a directive to the Land Registrar to immediately suspend such registrations heeding this directive.
The issue was discussed by representatives of condo developers with Minister of Housing and Construction Wimal Weerawansa. The latter had given an assurance that he will bring this matter to the notice of authorities and settle the issue.
A 100 per cent tax is levied on sales to foreigners for apartments below the fourth floor under a gazette notification issued by the Finance Ministry in 2008 under the Finance Act. For purchases above the fourth floor, foreigners need not pay a tax under this 2008 rule and though no changes have been made to this rule, the suspension of registration of foreigner-held apartments effectively bars such sales. A recent cabinet decision also re-iterated that amendments will be made to several land related laws includ- ing the Registration of Documents Ordinance, the Notaries Ordinance and the Title Registration Act to prohibit foreigners from buying land in the country.
Mr Gamage said the government will have to invalidate the 2008 gazette notification along with these amendments to prohibit the condo sales to foreigners. The Apartment Ownership Law should also be amended to implement the cabinet decision, he said. However he said that this matter has to be sorted out with the Finance Ministry and it is yet to be discussed.
Condo developers noted that between 40 to 70 per cent of apartment units at several condos being built in Colombo and the suburbs have been pre-sold to foreign expatriates and foreigners. They say future sales would be badly affected due to the failure of the government so far to clearly define
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