Special
Assignment 
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RECOLONISING
THE SOUTH? Locals complain that land prices have reached dizzying heights during the past months-- increasing by as much as 400 percent-- making it virtually out of reach for them. With the sale of land now not merely being confined to local newspaper ads and brokers, but going hi-tech with various websites popping up in different western languages, the gates have been opened wide for more and more foreigners to buy up the land. The victims are locals who wish to buy land in the coastal areas and the local tourist industry. An investigation by The Sunday Times revealed that this phenomenon is not only confined to the coastal belt but appears to be eating into the interior too. A plot of less than 20 perches of land, five kilometres inland from the low-price tourist resort of Hikkaduwa has been sold for Rs. 2 million to a foreigner. This plot of hilly land has been bought by a Finnish national who works alongside the workers to build his home. He refuses to talk about his land transaction. In another case, the Inter Net advertises a 4-bed-roomed, refurbished colonial house on a plot of 50 perches of land, 1.5 km from the beach at Dodanduwa/Hikkaduwa, at a value of 110,000 EUR (Rs.12.87 million).The advertisement says, "The colonial house , built in 1956 .....has just finished a complete renovation” (www.lankarealestate.com). Another website advertises a 3-bedroomed house, 5.3 kilometres away from the beach in Hikkaduwa with 1750 sq ft / 163 sq m at 29,950 EUR. It also says, "plus 5 percent commission (Rs. 3.7 million) to be paid by the buyer." (www.lankaland.com). But local residents say the value is much lower. The Sunday Times was also told that the local/foreigner ratio in the southern coastal belt stands at an alarming 1:5.These foreigners comprise mainly German, English and Dutch nationals As the demand by foreigners increases, so do the prices, with the current going rate for a perch of beachfront land in Hikkaduwa being between Rs. 100,000 to 150,000 and the interior about Rs. 50, 000 a perch. In Weligama, a perch of land which was about Rs. 8,000 two years ago, has risen to between Rs. 25,000 and 30,000 while in the coastal belt of Tangalle and Hambantota a perch of land which was about Rs. 20,000 two years ago has shot up to Rs. 80,000. In villages like Gonapinuwala, Ampegama, Aluthwala, Pinkanda, Binkanda and Kumarakanda, a perch of land that went for Rs. 3000 now fetches Rs. 10,000. "These land owners are not willing to sell their blocks to local people like us because they know there are foreigners lurking around to purchase the land for a more attractive sum," R.K. Dharsana, an assistant diving instructor in Hikkaduwa lamented. Another sector that is being hit hard is the local tourism industry that saw a boom in their business especially after the ceasefire. Some of the foreigners enter the tourism trade by marketing whatever they have to offer here, in their home countries. They put up what is known in modern tourism lexicon as ' boutique hotels' which are in reality hotels but in appearance look more like chic-looking bungalows. A local hotelier charged that this was eating into their traditional territory and a ruse to avoid the 16.5 percent local tax and VAT imposed by the government on hotels. Most land transactions take place via the modern broker -the internet - with locals and foreigners establishing contacts with both buyer and seller. The website advertisements provide the necessary details, including the price and nature of the property, facilities available such as water supply, electricity, telephone, IDD and Internet access. The details even include the type and quality of window grills, bathroom fittings, kitchen fittings, gutters and downpipes. If necessary the web brokers are ready to provide more details and even photographic evidence to prospective buyers with a 5 percent commission being paid to the website owner if the transaction goes through. To attract more foreign buyers one website broker has even advertised that the Sri Lankan government was considering issuing permanent visas for retired foreigners. "From foreigners with first class contacts to government members and ministers, I heard that a legislation is in the making offering permanent visa for retired foreigners under certain conditions. That would be fantastic! And it would match the official policy to make Sri Lanka the most open country in South Asia-they want to become a second Singapore", www.lankaland.com quoted. Explaining the land- buying process, the same website says that once the buyer decides on the property he wants, a standard contract would be written in three days after which the seller and buyer would meet in the presence of a lawyer to sign the contract. The Website also says, " all property is bought with cash. No local sellers will accept cheques and bank transfers. They don't want anybody to know how much money they have in their hands". Some of the other Websites that advertise the sale of property in Sri Lanka include, www.lankaland.com/ www.ceylonrealty.com/ www.lankarealestate.com and www.sriland.netfirms.com. In addition to the hi-tech broker, there are the local or foreign middlemen. They are mainly tourist guides who have a good rapport with prospective buyers and sellers. Once a middleman finds a potential buyer and seller, the deal is signed with a lawyer in attendance. The real monetary value of the property is not declared while signing the deal to avoid paying the full amount of tax to the Government. Undervaluing the sale price to defeat government taxes is the trick of the trade. The Sunday Times investigation revealed that there are specialised lawyers in the South to carry out these underhand transactions at a price. Some lawyers act as brokers too.The Sunday Times also learnt that in some instances wealthy brokers bought up whole chunks of land whenever they were available and sold them to foreigners for an attractive amount. One hotelier in Hikkaduwa claimed that a European lady in Tangalle had bought land that was available for a cheap rate the coastal belt and was selling these blocks at a high price to foreigners with whom she had contact. It was also revealed that some foreigners before coming to Sri Lanka to buy property, transfer their money to foreign currency accounts of their lawyer- friends based in Colombo so that they can avoid Customs tax. Exchange Controller H.A.G. Hettiarachchi said there was no ceiling on the amount of foreign exchange that was brought in to the country by a person but it had to be declared at Customs if it exceeded 10,000 US Dollars. He said a foreigner was allowed to bring in the required amount of foreign exchange for transactions such as buying land but that such transactions had to be solely for residential requirements. He said all development of the land had to be done using foreign exchange. Meanwhile Deputy minister Piyasena Gamage who represents the Galle district speaking to The Sunday Times recently said, new policies are to be framed and legislation enacted soon to minimise avenues for foreigners to purchase land and to impose a heavy tax on property that has already been bought. Save
the local industry “They buy up land on the pretext of holidaying here and then put up small villas and attract fellow travellers from their country who would otherwise stay in local hotels. They promote these villas on the internet as holiday resorts. "We have to pay 16.5 as tax plus VAT and Rs.100,000 annually for liquour licences and some other amount to the Pradeshiya Sabha, but those foreigners avoid all these by running villas. Warning that the local tourism industry would face a major threat unless the governmet took some steps, he said there should be a policy whereby a foreigner who bought land here would have to pay tax. We
are only here to help the people Recalling his entry into brokering, Mr. Hulse said that a local resident in the Fort Jiffry had approached him and pleaded him to find a buyer for his propoerty as he did not trust local brokers.He found and American couple to buy the property. He said since then locals have been coming to him to find foreign buyers for property. He says he did not go behind any locals but that they came to him. He also says that he does not charge a fee. He says he has brokered around 30 properties. He has formed his own company- Hulse Design and Decoration (Pvt) Ltd. and had employed about 30 people to reconstruct houses bought by foreigners in the Fort while retaining its historical beauty and value. He claimed it was the locals who were modernising their houses paying little heed to the historical value of the heritage site. Pointing out the benefits of foreigners buying property, he said it not only provided employment to locals but also foreign exchange to the country. He scoffed at allegations that foreigners were trying to take over the Fort area. He said they were only trying to help locals sell their land. " I think I can comment for the foreign colony. We are concerned about the negative reactions that have been whipped up. We are sad that we are not being welcomed by a place and people that we have embraced with love,” Mr. Hulse said. |
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