Two arrangements, not two words for one thing
The distinction sounds like vocabulary and is not. It determines how long the arrangement lasts, how it ends, which statute governs it, and what a landlord has to do to get the property back. People use the two words interchangeably in conversation and then discover, at the point it matters, that the law does not.
A tenancy has no fixed term. It may be verbal or written, it commonly runs from month to month, and it carries on until one party ends it.
A lease is granted for a defined period. It has to be in writing, and in Sri Lanka the writing must be of a particular kind.
Execution is the dividing line
C. Mathew and Co, in their note on leases and tenancies, put the mechanical test plainly: a fixed-term lease should be granted by deed and notarially attested, and where it has not been executed in that manner it operates as a monthly tenancy.
That deserves a moment. A document titled Lease Agreement, signed by both sides, witnessed, running for three years, is not a lease if no notary attested it. It is a monthly tenancy with a long piece of paper attached to it. The heading has no legal force; the attestation does.
Nothing about the arrangement announces the problem while it is going well. The rent arrives, the tenant stays, and the defect surfaces only when one side wants to rely on the term, the landlord counting on three years of income, or the tenant counting on three years of occupation.
What the missing term costs each side
Both of them, and roughly equally.
The landlord who thought the property was let until 2029 has an occupant who may leave on a month’s notice, in a market where re-letting takes as long as it takes. The tenant who moved a family, or fitted out a shop, has no answer if the owner gives notice in month five. Fit-out spend in particular assumes a term. Without one it is an unsecured bet on the landlord’s continued goodwill.
The 2023 Act made execution matter more, not less
The Recovery of Possession of Premises Given on Lease Act, Act No. 1 of 2023, built a dedicated procedure for recovering leased premises, and built a gate in front of it.
Two forms qualify under its definition of a lease agreement. The first is execution under the Prevention of Frauds Ordinance, section 2. The second is an instrument of lease granted under the Registration of Title Act. On either, the stamp duty must have been duly paid.
Miss that description and the Act is simply not available to you. So execution now decides two things rather than one: which arrangement you are in, and which route to court you can use if it goes wrong.
There is a quiet cost buried in this. Notarial execution and stamp duty are two line items a landlord can be tempted to defer, because they are payable at the beginning and their value is only ever realised at the end. A tenancy that runs its course without incident makes the saving look sound. The one that does not is the one that reveals what the saving actually bought.
Section 34 of the same Act adds a further consequence. A lease agreement executed on or after the commencement date of 20 January 2023 falls outside the Rent Act altogether. A landlord and tenant who execute properly are therefore stepping out of one statutory regime as they step into another.
Side by side
| Tenancy | Lease | |
|---|---|---|
| Term | none fixed; runs until ended | fixed and stated in the deed |
| Form | verbal or written | in writing, notarially attested |
| Usual rhythm | month to month | months or years, as granted |
| Stamp duty | not part of what defines it | must be paid for the 2023 Act to apply |
| How it ends | one month’s notice, from either side | expiry of the term, or notice of termination on breach |
| Rent Act | may apply, depending on the premises | disapplied where executed on or after 20 January 2023 |
| Recovering the property | ordinary court action | District Court procedure under the 2023 Act |
Bare land is inside the definition
The 2023 Act’s definition of premises reaches a building or part of a building together with the land belonging to it, and it expressly extends to bare land carrying no building and to part of a multi-storied building.
Land is leased for agriculture, for storage, for parking, for staged development, and the Act’s definition reaches all of it. The Central Bank of Sri Lanka’s Land Valuation Indicator for Colombo District rose 10.6% in the second half of 2025 against the same half of 2024, the underlying asset in a ground lease is not sitting still, which is exactly why the length and the form of the arrangement over it are worth getting right at the outset.
A second and separate Central Bank series covers the same ground from a different angle. The Land Price Index, Colombo District only, compiled twice a year, has been running since 1998. The two are not the same instrument and should not be quoted as one: the Land Valuation Indicator produced the 10.6% figure above; the 1998 start and the twice-yearly cadence belong to the Land Price Index.
Neither says anything about ground rents directly. What they do show is that the value of the thing underneath a long lease can move a good deal over the life of the lease, which is an argument for thinking about review mechanics at the start rather than discovering there are none in year seven.
Four questions that settle it
Is there a document at all. Does it state a fixed term. Did a notary attest it, and is the attestation on the instrument itself. Has stamp duty been paid on it.
Four yes answers describe a lease. A single no puts the arrangement back into tenancy territory, with a month’s notice on either side and no procedural shortcut to possession.
The first two can be answered without the file open. The third and fourth need the actual document in front of someone who knows what an attestation looks like, which is the point at which this stops being a matter of reading an article.
Take the document to a notary
Whether a particular arrangement is a lease or a tenancy, what the Rent Act does with it, and what the 2023 Act will and will not do for you are questions about your instrument and your premises. A notary or an attorney-at-law can answer them by looking; nobody can answer them in the abstract. A1 is an estate agency rather than a legal practice, and this is a boundary worth respecting in both directions.
Where A1 fits
A1 covers seven districts, Colombo and Gampaha, Kandy and Nuwara Eliya, Kurunegala, Galle and Matara, and acts for landlords and tenants alike, in residential, commercial and land property. On a letting, that means finding the right party and settling the commercial terms: the rent, the term, the advance, the condition of the premises. The instrument that records those terms is drawn by a notary, and the letting engagement ends at tenant placement, with property management referred out. Ask us early what term the market will actually support, and take the document itself to the person qualified to execute it.