Property owners with a CTB concession at risk

Owners of properties covered by a CTB concession for minor irregularities are facing serious risks on their investment unless the Planning Authority changes its interpretation of the law. Banks that have taken such properties as security against mortgages are also at risk in case of default, as the value of such properties may be much lower than expected as a result.

While these issues are objectively very technical, it is important for members of the general public who may be affected by the Planning Authority’s approach, to understand exactly how this impacts on their ability to sell or carry out alterations to their property.

What is a planning irregularity?

A planning irregularity, or illegality, is any development that is carried out without planning permission, or in breach of planning permission conditions. Development includes any building operation or a material change of use (e.g. turning an apartment into an office).

The Planning Authority has various means to control illegal development. When an illegality is detected by the Planning Authority’s Enforcement Section, either because it is visible publicly, through aerial photography, or is reported to it by members of the public or the press, an enforcement notice should be issued demanding the property owner to reverse the illegal development or to sanction it.

The PA is also able to control illegal development by disallowing any further legal development until the illegality is removed or sanctioned. PA Circular 2/96 stipulates the following:

• When existing development on a site is wholly or partly illegal (that is, it is not covered by a development permit), the [Planning Board or Commission] will not consider a development permit application relating to new development on that site, unless the illegal development is regularised.
• The illegal development may either be regularised through a specific application solely for that purpose or through an application which includes it as well as new development. However, in the latter case, it must be made clear in the application what development is covered (both in the description on the application form and in the drawings and plans), in order that the Planning Authority is sure that the unauthorised development does form part of the application.

Any attempt to “hide” illegal development in a planning application by not indicating it in the application drawings is construed as “fraudulent information” in terms of planning law, and will result in the revocation of any permit that may be granted as a result.

Moreover, properties that contain illegal development, whether in part or in whole, are not issued with Compliance Certificates by the PA, without which a request for water and/or electrical supply will be denied by ARMS.

What is sanctioning?

Sanctioning is the process of acquiring a retrospective planning permission for illegal development. The Planning Authority will assess the illegal development in such planning applications in terms of current planning law, regulations and policies. Should the planning application comply, it will be approved subject to the payment of a fine as determined by the Planning Board or Commission in accordance with L.N. 277 of 2012.

Should it not be approved, and no appeal is submitted, an enforcement notice will be automatically issued on the owner to reverse the illegality.

In practical terms, sanctioning is only allowed when the illegal development would have been approved had an application been submitted prior to the start of the works.

What is a CTB?

Until 2016, the Sanitary Regulations, which regulated natural light, ventilation and drainage systems in buildings, formed part of the Superintendent of Public Health‘s remit. All planning applications were reviewed by the Sanitary Engineering Office (SEO), which was independent of the then Malta Environment & Planning Authority (MEPA) despite having an office within its building. The statutory minimum dimensions of backyards, internal yards and clear internal heights were binding, and no allowances or discrepancies were permitted, unless approved by the General Services Board in very particular cases.

This meant that apartments in blocks which did not respect these minimum dimensions, for example, had no means of redress. Not only were property owners unable to apply for minor development within their properties, but they were also unable to sell them as they were unsanctionable. They effectively had no commercial value as they could not be traded, and banks would not approve mortgages for their acquisition.

In August 2012, a new set of regulations was published which afforded a concession to the effects of Circular 2/96, for minor discrepancies from the minimum sanitary requirements that were committed prior to their coming into force. These regulations formed part of the Environment and Development Planning Act, 2010, (Cap. 504), Article 91 Eighth Schedule Category B, and referred to as CTB in short.

Property owners who submitted a CTB application to the PA to cover illegal development that fell within specific parameters, together with a payment of €250, would be granted the two following concessions, as outlined in PA Circular 4/12:

1. applications requesting permission for alterations and additions to the same dwelling unit could be accepted (without prejudice to any other requirements); and
2. a Certificate for the provision of new water / electrical services to the dwelling could be issued as per Article 92 of the Act.

The circular also points out that CTBs do “not have an expiry date“.

The CTB regulations had the effect of restoring the affected properties’ market value to levels comparable to legal properties of a similar description. As a result, these properties became sellable again as banks were reassured that the effects of the concession were permanent.

It is important to point out, however, that CTBs were not permits and that the infringements were still considered illegal. Indeed, Circular 4/12 clarifies that “Article 91 of the Act does not sanction the infringements in question, but it grants the concessions described above. Therefore, if amendments to premises are eventually applied for and the premises contains (sic) infringements that would have already been covered by an Article 91B Notice, these must be clearly identified as such on the drawings by the architect, since any eventual permit would not be sanctioning the said infringements unless this is specifically requested and accepted.”

Nevertheless, the practical benefits of these regulations were self-evident. The scope of infringements was subsequently extended twice in 2013 to include minor illegalities that also fell within the planning regulations, including penthouse setbacks, building alignments, and site curtilages.

The effect of the new planning act, regulations and policies

With the coming into force of the Development Planning Act, 2016, (Cap. 552), the CTB regulations were repealed and no further concession applications could be submitted. The revised design policy guidance document, DC15, had meanwhile made some types of irregularities in the CTB schedule sanctionable, and therefore completely legal.

The new Health & Sanitary Regulations, published in June 2016, which reduced the minimum sizes of backyards, internal yards, and the clear internal height of buildings also made several other types of infringements sanctionable through a normal planning application.

In August 2016, a new set of regulations was published that would allow for the regularisation of all the other types of infringements, while also widely extending the scope of illegalities that would be covered. While the CTB regulations were limited to minor types of infringements, the Regularisation regulations, as the scheme is known, allowed almost any form of illegality in urban areas to be regularised as long as it did not cause “an injury to amenity“.

The Kamra tal Periti had, at the time, expressed its concerns about the vagueness and wide scope of the regulations, with potentially negative consequences on the built environment. Nevertheless, the regulations as published provided a legal substitute for the CTB, which is arguably superior for the property owner as regularisations have the legal standing of a normal development permit. The regularisation fees, however, are considerably higher than €250, frequently running into several thousand Euro per property. Moreover, the fees will be raised by a further 25% in August 2018, on the third and final year of this scheme.

One of the Kamra’s main concerns was how owners of properties covered by CTBs would be affected. Firstly, the Kamra’s view was that those who had been granted a CTB concession, should have their concession automatically converted into a regularisation permit, especially in those instances where sanctioning is still not possible despite regulatory and policy changes. Secondly, it was seeking clarification whether the legal and planning value of the CTB concession was being watered down with the coming into force of the regularisation scheme.

The Kamra’s concerns on these, and other issues, were dismissed and the regulations published without any material changes.

CTBs & political direction

Towards the end of 2016, members of the Kamra were increasingly reporting instances to the Council that planning applications for properties covered by CTBs were no longer being accepted unless the properties were first regularised. The consequence of this is that unless properties were regularised they would lose their market value with adverse consequences to property owners and the financial sector. The Council requested an urgent meeting with Johann Buttigieg, the Executive Chairman of the Planning Authority to clarify the issue.

A meeting was held in January 2017, during which the Kamra outlined its concern, pointing out the fact that CTBs have no expiry date. Thus, there are no legal grounds for property owners to regularise a property covered by a CTB prior to submitting a planning application. The Kamra was advised that this policy decision was based on political direction, and that the Planning Authority was unable to process applications differently unless the political direction was changed.

Consequently, the Council immediately requested a meeting with former Parliamentary Secretary for Planning, Dr Deborah Schembri, but despite several reminders over a number of months, no acknowledgement to the Kamra’s request was forthcoming.

Following the June 2017 general elections, the Council had met with newly appointed Minister Ian Borg and Parliamentary Secretary Chris Agius. A second meeting was held on 23rd August 2017 with Chris Agius to discuss some of the issues raised in greater detail, followed by a letter sent on 13th November, 2017.

Ongoing discussions between the Kamra and Government to resolve this anomaly are still under way.

¹ http://pq.gov.mt/PQWeb.nsf/7561f7daddf0609ac1257d1800311f18/c1257d2e0046dfa1c1258049002fab55!OpenDocument