The Maldives Government has on 8th November 2023 introduced the first amendments to the 2022 tourism regulation, ‘Regulation on the Extension of Construction Period and Deferment of Rent and Fines of Places Leased for Tourism Purposes’ (Regulation No: R-236/2022) (“CP Extension Regulation”) governing aspects of granting extensions to the constructions periods of tourism properties and granting deferments to the property’s land rent and fines.
The ‘First Amendment to the ‘Regulation on Extension of Construction Period and Deferment of Rent and Fines of Places Leased for Tourism Purposes’ (Regulation No: R-172/2023) (“First Amendment”) is issued by the Ministry of Tourism (“MoT”) and came into force on 8th November 2023. This Amendment is aimed at addressing some of the practical issues confronted by the government in relation to the granting of redevelopment periods, application deadlines and extended construction periods in relation to distressed tourism properties, which are those that have not been able to complete the development and construction of their islands within the prescribed or extended construction periods granted by MoT.
Increase to Redevelopment Periods
The First Amendment has increased the maximum period allowed for a temporary closure in operations of a tourist property in connection with redevelopment or renovation works from the previous maximum period of 18 months to 24 months. The amendment also provides a benefit to properties which at the time of commencement of the First Amendment, were already in closure for redevelopment, by providing them with the opportunity to apply to the Ministry to seek an additional period of 1 year if they apply prior to the expiry of their current redevelopment period.
Removal of the Application Deadline
The amendment has removed the application deadline previously prescribed under the CP Extension Regulation for applicants to apply for an extension of their construction period. Also removed is the rule that any applications filed after the prescribed deadline would not be accepted. As such, applicants seeking to apply to MoT to extend their construction periods, may now do so at any time they wish.
Concessions to Distressed Islands
Under the CP Extension Regulation, MoT had a discretion to grant an additional 1-year construction period for distressed tourism properties which were unable to complete the construction of their properties within the maximum extended construction periods provided that 70% of works outlined under the work plans were completed.
Under the First Amendment, MoT still retains the discretion to grant an additional extension period for the construction of distressed islands (and such extension need not be limited to 1 year alone as well) however, the amendment removes the requirement for 70% of the work to be completed and instead introduces a more practical approach to assessing the status of the construction phase. These include carrying out inspections on the distressed property itself and verification requirements for the MoT approved work plan itself.
Lastly, the First Amendment introduces an exception to the maximum extended construction period which may be allowed for distressed properties where the head lease rights of such distressed property is transferred to another party under a court judgment or order. Here, where the head lease rights are so transferred to another party, the starting date for the maximum extended construction period will be the date the head lease has been transferred to the new party under the said court judgment or order.
