Closing Tourist Resorts for Redevelopment under Regulation No: 2026/R-80

Introduction

Operating resorts and other tourism properties are closed from time to time for renovation, upgrading or rebuilding. The Regulation on the Granting of Extensions for Completion of Development of Tourism Development Projects and Properties Closed for Redevelopment, and the Deferment of Lease Rent and Fines (Regulation No: 2026/R-80) now sets out the rules for such closures. The regulation was published in the Government Gazette on 10 September 2026 and came into force on that date (Section 19).(1)

Section 10 of the regulation is the main provision on redevelopment. It is supported by the provisions on applications, work plans, construction permits and lease amendments in Sections 11, 12, 13 and 16.

Meaning of redevelopment

Redevelopment means the closure of a property to upgrade its standard, or to redevelop, repair or renovate it (Section 18(g)). The redevelopment period is the period during which the whole or part of the property is demolished and renovated to upgrade its standard after closure (Section 18(h)).

The regulation applies to islands, plots of land and lagoons leased for tourism purposes (Section 18(b)). These include resorts, resort hotels, hotels, guesthouses and yacht harbours (Section 18(d)).

Approval before closure

An operating tourism property may be closed for redevelopment only after an application is made under Section 11 and the ministry has given its approval (Section 10(a)). The closure must be formalised by an amendment to the lease agreement under Section 16 (Section 10(i)).

If a property stops providing services and closes without following this procedure, the ministry may take action under the lease agreement (Section 10(j)).

Conditions of approval

Section 10(b) provides that approval is granted only if the lessee agrees to the conditions in Section 4(b). Those conditions were drafted for extensions of the construction period of undeveloped properties, but they apply to redevelopment through this cross-reference. The lessee must agree:

• to complete the work and commence operations within the period granted or, in a phased development, to complete and open at least one phase; and
• to pay the government a fee of USD 100,000 and to meet a corporate social responsibility (CSR) obligation, either by depositing the amount specified in Schedule 1 into the Tourism Trust Fund or by spending it on a development project determined by the ministry.

Under Section 4(c), these amounts must be paid within 30 days, including public holidays, from the date of the ministry's written conditional approval. If they are not paid, the conditional approval is cancelled and the ministry may take action under the lease agreement, including termination.

Schedule 1 sets monthly CSR rates by zone, island size and the stage of the period. The rates are as follows.

Schedule 1: monthly CSR contribution (USD per month)

Zone and atolls	Island size (hectares)	Months 1 to 6	Months 7 to 12	After 12 months
Zone 1 and Zone 6 (Haa Alifu, Haa Dhaalu, Shaviyani, Gnaviyani and Seenu)	0.01 to 10.00	USD 1,500	USD 2,000	USD 3,000
	10.01 to 30.00	USD 2,000	USD 2,500	USD 4,000
	30.01 to 50.00	USD 2,500	USD 3,000	USD 5,000
	Above 50.00	USD 3,000	USD 3,500	USD 6,000
Zone 2 (Noonu, Raa, Baa and Lhaviyani)	0.01 to 10.00	USD 4,000	USD 5,000	USD 6,000
	10.01 to 30.00	USD 4,500	USD 5,500	USD 7,000
	30.01 to 50.00	USD 5,000	USD 6,000	USD 8,000
	Above 50.00	USD 5,500	USD 6,500	USD 9,000
Zone 3 (Kaafu, Alifu Alifu and Alifu Dhaalu)	0.01 to 10.00	USD 5,000	USD 6,000	USD 7,000
	10.01 to 30.00	USD 5,500	USD 6,500	USD 8,000
	30.01 to 50.00	USD 6,000	USD 7,000	USD 9,000
	Above 50.00	USD 6,500	USD 7,500	USD 10,000
Zone 4 (Vaavu, Meemu, Faafu, Dhaalu, Thaa and Laamu)	0.01 to 10.00	USD 3,000	USD 4,000	USD 5,000
	10.01 to 30.00	USD 3,500	USD 4,500	USD 6,000
	30.01 to 50.00	USD 4,000	USD 5,000	USD 7,000
	Above 50.00	USD 4,500	USD 5,500	USD 8,000
Zone 5 (Gaafu Alifu and Gaafu Dhaalu)	0.01 to 10.00	USD 2,000	USD 3,000	USD 4,000
	10.01 to 30.00	USD 2,500	USD 3,500	USD 5,000
	30.01 to 50.00	USD 3,000	USD 4,000	USD 6,000
	Above 50.00	USD 3,500	USD 4,500	USD 7,000

The note to Schedule 1 counts the months from the date on which the construction period was first extended. It does not refer to a redevelopment period. The regulation therefore does not make clear how the CSR amount is calculated for a redevelopment closure, or whether the full schedule applies to it.

Length of the closure

The regulation sets the following maximum periods:

• where part of an island or land is closed for redevelopment, 18 months (Section 10(g)); and
• where the whole property is demolished and redeveloped, up to 24 months, at the ministry's discretion (Section 10(h)).

The regulation does not state a maximum period where the whole property is closed but is not demolished. The period in such a case will depend on what the ministry approves and records in the lease amendment.

Rent during the closure

Where the whole property is closed, the ministry may defer the rent payable during the approved redevelopment period (Section 10(c)). Rent resumes when the redevelopment period expires.

Where several islands have been developed in one lagoon and only one island is closed, the ministry may defer the rent for that island for the approved period. When the redevelopment period for that island expires, rent for the whole property resumes (Section 10(d)).

Where a property that is already closed with the ministry's approval applies for a redevelopment period, the ministry may, in addition to the land rent for the period of closure, defer rent that was unpaid before the closure and the fines arising from its non-payment (Section 10(e)).

Rent and fines deferred under Section 10(c), (d) and (e) must be paid in equal quarterly instalments within 24 months from the date the redevelopment period expires (Section 10(f)). This is a shorter repayment period than the options available to undeveloped properties under Section 8(b). Although Section 10(c) refers to deferment in accordance with Section 8, Section 10(f) sets its own payment period for redevelopment, and the more specific rule is likely to govern.

Deferment of rent under Section 10 is at the ministry's discretion. It is not automatic.

Application, lease amendment and work plan

The application must be made on the form prescribed by the ministry, with a resolution of the board of directors of the lessee company (Section 11(b)). The lease amendment must state the redevelopment period granted and, where rent and fines are deferred, the period over which they accrued and the period for payment. It must also state that the ministry may terminate the lease if the work is not completed within the maximum period, and that the government is not required to pay compensation in that event (Section 16(a)(1)).

Within seven official working days of signing the lease amendment, the lessee must submit a work plan (Section 12(a)). The work plan must show, among other things, the intended reopening date within the redevelopment period, the status of the environmental impact assessment, any mobilisation period and the total period proposed for construction. A construction permit is issued only after the amendment is signed and the ministry approves the work plan (Section 13). Once the ministry has decided that the conditions are met, it may issue permits and approve import duty exemptions for development goods before the amendment is signed (Section 16(b)).

Failure to reopen

Section 10 sets out a staged procedure where the property does not reopen on time.

First, if the work is not completed and services have not started within the redevelopment period, the ministry must give the lessee 30 days' notice to open the property (Section 10(k)).

Second, if the property is still not open when the notice expires, the ministry may fine the lessee as provided in the lease agreement and grant a further period on payment of a fee (Section 10(l)). The options are:

Further period under Section 10(l)

Further period	Fee	Fine
6 months	USD 300,000	As stated in the lease agreement
12 months	USD 600,000	As stated in the lease agreement

The maximum further period is 12 months, within which the property must be completed and opened (Section 10(m)).

Third, if the property is still not open after the notice period and the further period, the ministry may terminate the lease agreement. The government is not required to pay any compensation to the lessee (Section 10(n)).

Section 14 adds a financial consequence. If the property has not opened before the expiry of the redevelopment period referred to in Section 10(l), all accrued rent and fines, including deferred amounts, must be paid to the State within 24 months from that date (Section 14(a)). If they are not paid within that time, the ministry may terminate the lease (Section 14(b)). Section 14(c) allows the ministry to disapply these rules where the operating licence is issued within 15 official working days, but it refers only to the expiry of the construction period. It is not clear whether it also applies to a redevelopment period.

Comment

The regulation replaces case-by-case arrangements with a formal approval process for closing an operating property. A property that closes without approval faces action under its lease, and a property that fails to reopen faces a fixed sequence of notice, fines, further fees and termination.

The most significant point for operators is cost. Because Section 10(b) applies the conditions in Section 4(b), a redevelopment closure appears to attract the USD 100,000 fee and a CSR contribution in the same way as an extension for an undeveloped property. The regulation does not explain how the CSR schedule applies to a redevelopment period. Operators planning a closure should obtain the ministry's written position on the amount payable before committing to a closure date.

Rent deferment during redevelopment is discretionary, and deferred amounts must be repaid within 24 months after the redevelopment period ends. Operators and their lenders should take this repayment schedule into account when planning the financing of the redevelopment.

This article reflects the law as of 29 October 2026.

Endnotes

(1) Government Gazette, Volume 55, Issue 145, 10 September 2026.

For more information, please contact:

Mr. Ahmed Murad, Senior Partner

Email: [email protected]