Developers, architects say changes to PA applications can ‘curb abuse’

Changes to the Planning Authority’s (PA) development application that made it easier for the real owners of land proposed for development to remain unknown, were harshly criticised by both the Malta Developers Association (MDA) and the Chamber of Architects (Chamber).

The MDA told The Shift the association “has no objection if the law were changed so that only the owners [of land] would be able to apply for development permits if that would help to curb abuse”.

Replying to questions on changes to the PA’S application form, the MDA’s Director General, Marthese Portelli, said: “Transparency and good governance should always be safeguarded”.

The Chamber’s President, Simone Vella Lenicker, also separately criticised the changes. She told The Shift, the Chamber wants to see legal amendments “without delay”.

Two cases in Qala, Gozo, are subject to legal proceedings on issues of declaration of ownership in planning applications: one involves a tiny countryside room in ruin that was granted a permit for conversion into a pool villa, and another case is focused on two blocks of flats that are part of a larger development.

The Qala local council and NGO Din L-Art Helwa are requesting revocation of these permits, partly on the basis of false declaration of ownership. In both cases, the land was held by a company in which developer Joseph Portelli is the majority shareholder. Yet, different applicants declared being sole owners of the entire site.

In the new application form, one of the choices remains unchanged, specifying that the applicant, while not the owner, would have sent a registered letter stating his intention to apply for development and getting the owner’s consent.

A new choice was added: “I am not an owner of the entire site, but I am authorised to carry out such proposed development through an agreement with the owner.” What constitutes ‘agreement’ remains undefined so a verbal agreement may be sufficient.

This last choice has introduced total opacity on the landowner’s identity. Any potential conflict of interest between landowner and planning board member, or case officer, would remain hidden.

It’s a point put in the legal proceedings in the latest Qala case, which goes that “attempts to obscure the true ownership of the sites being developed may result in conflicts of interest going unnoticed.”

Although architects – including Vella Lenicker in her replies – tend to argue that a development application pertains to the site, not the owner or applicant, judges maintain that planning boards are “quasi-judicial bodies” subject to the same conflict of interest rules as the judiciary.

The Constitutional Court is even currently hearing a case in which veteran Gozitan lawyer Alfred Grech is arguing that he did not have a fair hearing in his opposition to a five-storey block of flats behind the San Lawrenz church because the architects that sit on the board stand to indirectly benefit from “rampant development” by virtue of their private practice.

Yet develpers tend to hold land they develop on a promise of sale agreement, and then attempt to sell flats on plan to raise money to pay for the land.

In such cases, the buyer buys directly from the landowner, with the developer simply assigning rights – and saving on tax. Although the developer would still pay tax on the assignment of rights, notaries consulted said that the cumulative tax bill would be higher if the developer had to buy the land and then sell directly to the buyer.

“The tax savings would be a fraction of a flat’s price,” one notary said. “But a large developer that sells hundreds of flats every year could potentially save on – or avoid – tax to the tune of hundreds of thousands every year.”

Asked about this, Portelli said “it is up to the government to protect the interests of all its citizens, including in tax collection and enforcement.”

A senior notary who preferred to remain unnamed cautioned against any potential legal changes that handicap couples who seek to build a matrimonial home, and enter into a promise of sale agreement until they get a building permit and a loan before buying the land.

“However,” he said, “I do support greater transparency at all levels to curb abuse.”

Vella Lenicker said that while the application form as amended is compatible with the law, “the issue is whether the law makes sense in a scenario where individuals are purposely intent on trying to hide their identity from the Authority and/or the public”.

She said that another issue is that the “current form” could allow one of the owners “to hide from the other owners the fact that s/he has submitted an application on the site. This may be an issue in disputes on inheritance, or in marriage separations or divorce.”

Environment Minister Aaron Farrugia was approached for comment.