MOT Updates Land Rent Regulations

In a gazette publication of 23 December 2021, the Ministry of Tourism has updated the Rent Regulations governing payment of land (lease) rent in respect of islands, lagoons, and land given for tourism development. The gazette citation is 2020/R-171.

These Rent Regulations are made with reference to section 16-19 of the Tourism Act as updated by legislative changes made via the Tenth Amendment, a little over a year ago on 27 December 2020. 

Registration of land area 

Land rent is based on land area determined at mean tideline. Land area will always be the land area registered with the MOT. 

It is for the lessee to arrange at its cost and expense the submission of a land survey report to the MOT and complete the process of registering the land area in any of the following circumstances: before seeking the operating license on completion of development of the property; or on occurrence of any event that could trigger the imposition of land rent even if the development remains incomplete (for example: lapse of a rent free construction period or an extended construction period).  

The survey must always be carried out by a registered/licensed land surveyor. 

The registration of land area with MOT will be confirmed to the lessee in writing by the MOT. 

Charging land rent

Land rent will be paid as per the (last) registered land area. 

Once registered, the land area will remain unchanged (unless there is a review of the land area) even if changes may occur to the land area due to erosion or accretion.

If any increase occurs to the land area due to expansion (creation) of land as may be approved by the MOT, the applicable land rent will necessarily be varied to reflect the (now) increased size. 

Increased land area 

Where there is any approved increase brought to the land area, the new increased land area will have to be registered with the MOT within 30 days of completion of work. 

The lessee will be notified in writing of any revisions made to the registered land area or registration of any new land area. 

If the lessee fails to register the new land area after creation of new land, the lessee will be asked to pay a fine and apply for registration. 

If any unauthorized increase is brought to any land area (registered with the MOT), the lessee will be asked to pay a fine and applicable land rent will be varied based on the new land area.

The MOT may also disallow use of unauthorized increases to the land if the increased land goes outside permissible limits or applicable development controls. 

Whether the creation of land occurs in conjunction with existing land or away from such existing land, the law will read them as an increase of the existing land area of the property. 

Unregistered land area

Until a (new) land area is registered with the MOT, the applicable land area of the property will the land area indicated in its site plan (as approved by the MOT). 

Any property that has neither a registered land area nor a site plan (approved by the MOT), the applicable land area as found in the records of the relevant government agency will be the land area. 

If a lagoon has no land area or site plan, the land area will be based on MOT’s determination of the entire reef line of the lagoon as the applicable land area. 

If a land demised on an island has no registered land area or approved site plan, the applicable land area will be the land area specified in the lease agreement; or that which is provided in the land use plan of that island.

Those are all interim determinations and the lessee will continue to be responsible to register the land area with the MOT.

Once land area is properly determined and registered, the temporary land area will be abandoned and the land rent will be reassessed in line with the (now) registered land area.

Irrespective of what is in the Regulations to the contrary, land area on inhabited islands will always be determined based on the approved land use plan of the (relevant) island.

Review of land area

A registered land area may be reviewed at the option of both the lessee or the MOT. Generally, all cost and expense in such review will be to the account of the Lessee. However, if the MOT asks for a review within 5 years of registration of the land area, the MOT will bear the expense of the new review. 

The rent will always be assessed on the last registered land area. Any subsequent discovery that any land rent paid earlier may have been either in excess of or less than what is actually due, will not alter the rent previously charged and the previous charge will remain unaffected. 

Payment of land rent

Land rent will be paid as provided in the law and the regulations. Unless decided by the government, it will always be paid in US dollars. 

A rent year will be 1 January to 31 December. The rent amount is payable in 4 quarterly payments; each due on commencement of the relevant quarter. 

Deferment of land rent

The Regulations simply provide the basis to allow deferment of land rent and associated fines in certain limited circumstances: on special grounds; when construction period is extended; when closed for renovation; or for stimulating economic growth and addressing commercial challenges in a region. 

Special grounds relate to periods when a declaration of emergency is in place due to national security, public health or disaster management. 

Detailed processes may be provided by the MOT for each of the circumstances. Any concession made will be applicable to all like cases alike. 

Rent related fines 

Any fines charged on outstanding land rent will now be calculated at 0.0493% per day on the amount due. The benefit is to apply backwards to all applicable fines starting from 29 July 2019. It is to override any agreement to the contrary.

By MN

Photo: Courtesy Mihaaru