Real-Estate

Sri Lanka's household sector credit quality continued to decline during the first half of last year signaling a plausible build-up of imbalances in the sector. The NPL ratio of the household sector has been rising since 2018 signifying a worsening of credit quality. The NPL ratio of the household sector rose to 20.2 percent by the end of 2020Q2 compared to 12.5 percent in 2019Q2 despite the moratorium granting relief measures for those affected by the COVID-19 pandemic, the Central Bank data indicated. The Bank cautioned on a high possibility of NPL levels rising significantly by the end of the moratorium period. Despite the banking sector is the main source of household sector debt, the non-performing loans (NPLs) were largely stemming from the non-bank financial institutio...

The government plans to exempt investments in the housing market through Sri Lanka Real Estate Investment Trusts (SLREIT) to be exempted from capital gains tax and reduce stamp duty up to 0.75 percent from the current stamp duty of 4 percent. The measures proposed in the budget 2021 to prmote SLREIT to attract investments into Sri Lanka's Real-estate market. It is proposed to simplify taxes on capital gains, where such taxes will be calculated based on the sale price of a property or the assessed value of a property, whichever is higher. The Dividends are also to be free from Income Tax. The Securities and Exchange Commission of Sri Lanka (SEC) published Rules of SLREIT the Gazette on 31st July 2020.

Sri Lanka’s Worsening Credit Quality in the Household Sector Raises Concerns

The government to offer tax concessions for investments in REITs