On 2 July 2019, the “Regulation on Construction Period Extension and Deferment of Rent and Fines for Places Leased for Tourism Purposes” was published in the Government Gazette. The Regulation sets out the conditions, and procedures for extension of construction period, and the deferment of lease rent and fines for Islands, lands and lagoons leased for the purposes of tourism development.
If a party, who has leased an island, land or a lagoon for tourism purposes, and wishes to extend their construction period, they must fulfil the conditions set out in the Regulation. Parties who wish to extend their construction period must, alongside other conditions, make a deposit as indicated in Schedule 1 of the Regulation as part of a Corporate Social Responsibility contribution. Upon fulfillment of the conditions, the Ministry has the discretion to either grant an extension for the full completion of the tourist establishment, or grant an extension for the leased property to be completed in different phases.
Furthermore, upon the commencement of the Regulation, a 30 day period is granted from the date of commencement for any party, whose construction period has expired, and has not applied for an extension of the construction period, to apply for an extension. Separate rules are set out for parties who fail to apply within the aforementioned 30 day grace period.
The Regulation also permits places that are undergoing development under new construction periods to have their outstanding rent and fines deferred, provided such a party applies for extension under this Regulation. The deferred amounts can then be settled over the remainder of their lease period. In this case, the deferred rent and fine repayments would commence from the 5th year of commencement of property operation..
The Regulation also allows properties already in operation that intend to cease operations entirely, for renovation or upgrading works to apply for rent deferment for that period. A maximum extension of 2 (two) years will be granted to complete those works, and the Ministry has the discretion to extend this period, provided 50% of the work is completed in accordance with the work plan during the first extension granted.
If a party is unable to complete development of their property by the end of the new construction period, they must pay the amount of outstanding rent and fines within 24 (twenty four) months of the end of the construction period as a lump sum payment. If they are unable to fulfil this condition the Ministry has the discretion to terminate the lease agreement.