Planning machine cools down under effects of COVID-19

The pandemic led to a sharp drop of 37% in the number of planning permits for new dwellings, down to 7,837 from 12,485 in 2020.

PA permits had reached a record high in 2019.

Latest PA data shows that 217 brand new dwelling permits were approved outside the development zones, as the PA continued its review of the maligned rural policy which has yet to be completed after an entire year.

The controversial policy, approved in 2015, has led to a total of 1,060 dwellings granted a permit by redeveloping rural ruins into villas with pools.

A review of the rural policy, started in October 2019, is still awaiting approval, with seven months having passed since a draft was was issued for public consultation in June 2020. The PA is still bound to issue a second draft for public consultation before the stricter policy is given final approval.

In an indication that the policy facilitated more construction outside the building zones (ODZ), only 656 dwellings were approved between 2009 and 2014, compared to 1,160 in the period between 2015 and 2020.

ODZ permits peaked at 285 in 2005, reaching an all-timer low of 42 in 2012. Numbers rose again after the approval of the controversial rural policy, peaking at 283 in 2016. In 2020, these numbered 217, the highest since 2016.

In 2020, ODZ dwellings also comprised 2.8% of total dwellings, up from 1.7% in 2018 and 1.1% in 2018 – the highest percentage since 2013.

COVID effect

The COVID downturn appears to made itself visible in planning permits, as 7,837 dwellings were approved by the PA in 2020, down from 12,485 in 2019, a decrease of 37%.

The sharp decrease follows two record years in which the PA approved 25,370 new dwelling units. This was the first significant decrease since 2013, when only 2,707 permits for new dwellings were issued. Between 2013 and 2019, the number of newly-approved dwellings shot up by a staggering 374%.

The decrease coincides with an economic slowdown in the wake of the COVID pandemic, but according to industry sources this also reflects a ‘cooling-off’ period following an all-time peak in 2018. This is because a large portion of applications for new dwellings approved in 2020 were presented in previous years before the pandemic struck.

Other statistics indicate that the decline in planning applications pre-dated COVID, with the number of applications already declining by 13% from 11,480 in 2018 to 10,003 in 2019 and 8,981 in 2020.

But despite the decline, the number of permits for new dwellings issued in 2020 remains higher than that issued in any single year between 2008 and 2017.

Moreover since in many cases work on the record number of permits issued in previous years still has to start, the decline in permits is unlikely to bring relief to residents faced by the onslaught of construction works.

Statistics show that permits for new dwellings shot up from 3,970 in 2000 to peak at 11,343 in 2007. Subsequently, the number of permits declined to just 2,707 in 2013 to rise to 7,508 in 2016.

The surge in approval of new dwellings between 2005 and 2007 coincided with a relaxation of building heights in urban areas. It also coincided with Malta gearing up for adoption of the single European currency, when more people started channelling their undeclared money into property development, fuelling a property boom.

The surge in permits after 2015 coincided with a relaxation in planning regulation through design guidelines which effectively superseded height limitations enshrined in local plans, and higher rates of economic growth, which contrast with the economic downturn between 2008 and 2013.