Owners of CTB homes paying additional thousands under new regulations

Owners of properties covered by what is known as a CTB concession for minor irregularities are having to pay additional thousands of euros before being able to sell the properties or apply for further development on the property, MaltaToday has learned.

Unless the Planning Authority changes its interpretation of the law, these property owners face serious risks on their investment. Banks that have taken such properties as security against loans are also at risk of default, since the value of the properties could end up being much lower than expected as a result.

Thousands of property owners had taken up the CTB concession scheme when it was introduced in 2012. Before then, 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, were granted two concessions, as outlined in PA Circular 4/12: applications requesting permission for alterations and additions to the same dwelling unit could be accepted (without prejudice to any other requirements); and a certificate for the provision of new water and electrical services to the dwelling could be issued as per Article 92 of the Act.

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

In all, more than 6,000 CTB concessions were issued: 209 in 2012, 1,961 in 2013, 1,441 in 2014, 1,730 in 2015 and 807 in 2016. Many other properties remain sanctionable as the owners never applied for a CTB concession.

Andre’ Pizzuto, president of the Chamber of Architects, said that 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.

“The introduction of the CTB concession came at a time when the market was in a bind with the economy in a recession, and it helped to jumpstart the industry as thousands of properties could be put on the market,” he said.

The CTB regulations were repealed in 2016, with the introduction of the Development Planning Act, 2016, (Cap. 552), a new set of regulations 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.

“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,” Pizzuto said. “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.”

He said that the Chamber was concerned about how owners of properties covered by CTBs would be affected.

One owner who got a CTB concession was told he would need to pay €4,200 to regularise the illegalities in his property before he could sell it.

“I do not afford to pay that amount right now, so I have to postpone my plans to sell the flat and move elsewhere,” he told MaltaToday.

And there are many others like him.

The Chamber of Architects had argued 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 was still not possible despite regulatory and policy changes.

“The Kamra’s concerns on these, and other issues, were dismissed and the regulations published without any material changes,” Pizzuto said. “This is not fair. CTB is an acquired right and you cannot take it away from people who paid for it.”

He said that the Chamber had raised its concerns with Parliamentary Secretary Chris Agius in a ‘positive’ meeting in November.

In the meantime, the regularisation scheme is set to enter its third and last year in August, when the fees will also be increased by a further 25%.

Many people who paid for the CTB will not afford to pay thousands and thousands of euros to get fully regularised under the new scheme, despite their having been told that the CTB had no expiry date.

And there is no plan in place for what will happen after August 2019. If the owner of a property with a CTB does not regularise the illegality before then, they would not be able to sell their property or apply for development on site, until such time as a new scheme is introduced.

And banks are currently between a rock and a hard place as they face the prospect of forking out tens of thousands of euros should any such properties they accepted as security on mortgages be forfeited.

PA reaction

In a reaction, the Planning Authority said that the law made it very clear that the CTB Concession was not tantamount to a sanctioning permit and that the illegal development was not regularised despite covered by a CTB Concession.

“Holders of CTB concessions could have been misled, thinking that their illegal development was regularised once being in possession of a CTB concession, when in reality, Chapter 504 made it clear that a development covered by a CTB concession was not deemed to have been regularised,” the PA said.

It said that Legal Notice 285 of 2016 (Regularisation of Existing Development Regulations, 2016) was subsequently promulgated, giving the possibility to holders of CTB concessions to regularise the unauthorized interventions covered by such concessions.

The PA said it had received 5897 applications for the Regularisation of Development Inside Development Zone from August 2016 until recently.

These applications have generated €13,901,159.06 of funds which are distributed as follows: 70% for the Irrestawra Darek scheme, 20% for the Development Planning Fund and 10% for the authority’s administrative expenses in relation to these schemes.