Extension of the Construction Period for Undeveloped Tourism Properties under Regulation No: 2026/R-80

Introduction

On 10 September 2026, the Ministry of Tourism and Civil Aviation published 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) in the Government Gazette.(1) The regulation is made under Section 52 of the Maldives Tourism Act (Law No: 2/99). Under Section 19, it came into force on the date of its publication.

The regulation repeals Regulation No: 2022/R-236, which previously governed extensions of the development period and the deferment of rent and fines for tourism properties (Section 20(a)). It sets out the relief that may be given to properties that have not been developed within the time stated in their lease agreements, and to operating properties that are closed for redevelopment (Section 3).

This article explains when the construction period of an undeveloped property may be extended, what the lessee must pay for the extension, and what happens if the property is still not opened at the end of the extended period.

Properties covered by the regulation

The regulation applies to islands, plots of land and lagoons leased for tourism purposes (Section 18(b)). Tourism purposes include resorts, resort hotels, hotels, guesthouses and yacht harbours, and services such as diving, water sports and excursions (Section 18(d)).

Two definitions are central to the regulation. The "grace period" is the rent-free period given under the lease agreement to develop a newly leased property. It does not include any additional time given under a regulation on development extensions (Section 18(l)). The "construction period" is the period granted under the regulation to develop the property after the grace period has expired (Section 18(c)). An extension under the regulation is therefore additional time after the grace period. It is not an extension of the grace period itself.

Which properties may obtain an extension

Section 4(a) gives the ministry discretion to extend the construction period of a property that has not been developed and opened within the grace period stated in its lease agreement. An extension is not a right of the lessee. It is granted at the discretion of the ministry, in accordance with the principles and procedures in the regulation.

Two threshold requirements apply:

• physical development work must have started within the grace period (Section 4(g)). Physical work means the start of actual construction on the island, lagoon or land (Section 18(k)); and
• an application may not be made while more than three months of the grace period remain (Section 4(h)).

Section 4(g) applies notwithstanding the general discretion in Section 4(a). A lessee who has not started construction on site within the grace period therefore cannot obtain an extension under Section 4.

Conditions of an extension

An extension is granted only if the lessee agrees to the conditions in Section 4(b). The lessee must agree:

• to complete the whole development and commence operations within the extended construction period or, where the property is developed in phases, to complete and open at least one phase within that period (Section 4(b)(1)); and
• to pay the government a fee of USD 100,000 and, in addition, to meet a corporate social responsibility (CSR) obligation (Section 4(b)(2)).

The CSR obligation may be met in one of two ways. The lessee may deposit the amount specified in Schedule 1 of the regulation into the Tourism Trust Fund, or it may spend the amount on a development project determined by the ministry (Section 4(b)(2)).

Under Section 4(c), the amounts under Section 4(b)(2) must be paid within 30 days from the date the ministry gives its written conditional approval. The 30 days include public holidays. If payment is not made within that time, the conditional approval is cancelled. The ministry may then take the measures available under the lease agreement, including termination of the lease.

The CSR contribution under Schedule 1

Schedule 1 sets a monthly CSR amount in US dollars. The amount depends on three factors:

• the zone in which the property is located;
• the size of the island in hectares; and
• the stage of the extension period, being the first six months, the seventh to twelfth months, or the period after 12 months.

The monthly amounts are set out in the table below.

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 provides that the period under the schedule is counted from the date on which the construction period was first extended under the regulation. Read with the table, this means that the monthly rate increases the longer the property remains on extension. For example, on this reading, a 20-hectare island in Kaafu Atoll granted a 12-month extension would pay USD 5,500 a month for the first six months and USD 6,500 a month for the next six months. This is a total CSR contribution of USD 72,000, in addition to the USD 100,000 fee.

Schedule 1 sets the CSR as a monthly amount, but Section 4(c) requires the amounts under Section 4(b)(2), which include both the USD 100,000 fee and the CSR, to be paid within 30 days of the ministry's conditional approval. Read literally, this means the CSR for the whole extension period must be paid within those 30 days, together with the USD 100,000 fee. In the example above, this would be USD 172,000.

Schedule 1 also sets the CSR by reference to island size only. Section 5, however, treats islands, plots of land and lagoons separately. The regulation does not state how the CSR is calculated for a lagoon that has not yet been reclaimed.

Length of the extension

Section 5 sets the maximum extension that may be granted from the date the regulation came into force:

• 12 months for an island or a plot of land (Section 5(a));
• 24 months for a lagoon (Section 5(b)); and
• a minimum of one month in any case (Section 5(c)).

Extensions are granted in whole Gregorian calendar months (Section 4(f)). Where the application is made before the grace period expires, the extension runs from the date on which the grace period expires (Section 4(d)). Where the application is made after the grace period has expired, the extension runs from the date the application is submitted to the ministry (Section 4(e)).

When the maximum period expires, the regulation looks at the progress of the development. If at least 50 per cent of the work has been completed, the ministry may grant a further extension, based on an undertaking by the lessee and after verifying the property (Section 5(d)). If progress is below 50 per cent, the ministry may terminate the lease agreement (Section 5(e)). The regulation does not set a maximum length for a further extension under Section 5(d).

Every extension under Section 5 is subject to the conditions in Section 4(b), including the USD 100,000 fee and the CSR contribution (Section 5(f)). On its wording, this includes a further extension under Section 5(d). Time added because of a declared emergency or disaster under Section 15 is not counted towards the maximum periods (Section 5(g)).

Phased development

The regulation defines phases as properties created or reclaimed as more than one island within a single lagoon (Section 18(p)). Where a property is developed in phases, at least one phase must be completed, opened and made operational within the construction period (Section 9(a)).

After the first phase is opened, the ministry may grant up to 12 months for the completion of each subsequent phase, notwithstanding the limits in Section 5 (Section 9(b)). The lessee must agree to pay:

• USD 300,000 where the property is developed in two phases; and
• USD 400,000 for each additional phase where the property is developed in more than two phases.

These amounts must be paid within 30 days of the ministry's approval (Section 9(c)).

Where reclaimed islands in a lagoon are developed in phases, a separate land survey is required for each island (Section 9(d)). Where the rent for the whole island or lagoon falls within a category in Schedule 1 to Section 7 of the Maldives Tourism Act, rent is paid for the operational island on the basis of its own size. The ministry may defer the rent and fines for the islands that are not yet developed. Deferred amounts are paid under one of the two options in Section 8(b), discussed below (Section 9(e)).

Transfers by court order and court settlements

Section 6 applies where the head lease rights of a property are transferred to another party under a court judgment or court order. The construction period is counted from the date of the transfer. The fee and the CSR obligation in Section 4(b) do not apply.

Section 7 applies where a court has issued a judgment concerning an undeveloped property and the parties enter into a settlement agreement. The ministry may extend the construction period under the settlement. Notwithstanding the other provisions of the regulation, the construction period is the period agreed in the settlement, counted from the date of signing of the settlement agreement and the amendment to the lease agreement (Section 7(b)). The fee and CSR under Section 4(b)(2) are not mandatory (Section 7(c)). Rent and fines accrued during the court proceedings may be subject to a payment arrangement, where the lessee must pay them under the judgment or agrees to pay them under the settlement (Section 7(d)).

Emergencies and disasters

Section 15 allows the lessee to apply to add to the construction period the time during which work was obstructed by a declared emergency or disaster. The lessee must submit an application stating that the development was obstructed, together with adequate documents showing the obstruction (Section 15(b)). If the ministry accepts the documents, the fee and CSR are not required for the additional period (Section 15(c)). The extension does not change the term of the lease (Section 15(d)).

Under Section 18(e), an emergency or disaster includes:

• a state of emergency declared under Article 253 of the Constitution;
• a public health emergency declared under Section 33 of the Public Health Protection Act (Law No: 7/2012);
• a disaster declared under Section 7 of the Disaster Management Act (Law No: 28/2015);
• adverse effects on the global economy caused by international wars; and
• matters beyond the developer's control, such as difficulty in obtaining goods or obstruction of financial transactions.

The last two items go beyond a formal declaration. However, Section 15(a) refers to an emergency or disaster declared by the relevant authority under the law. The regulation therefore does not make clear whether the ministry will accept supply or banking difficulties as a ground for extension without a formal declaration.

Deferment of rent and fines

For a property granted an extension, the ministry may defer the rent and fines accrued up to the date referred to in Section 4(e), and the rent payable during the extended construction period (Section 8(a)). The deferment is at the ministry's discretion.

The lessee may choose one of two options to pay the deferred amounts (Section 8(b)):

• payment without interest over five years, in four equal quarterly instalments each year, starting two years after the ministry issues the operating licence; or
• payment with simple interest of 3 per cent a year, in four equal quarterly instalments each year over the remaining term of the lease, also starting two years after the operating licence is issued.

Under the second option, interest is calculated on the principal outstanding on the date payments begin, and on the same date in each following year (Section 8(c)).

Application, lease amendment and work plan

An application must be made on the form prescribed by the ministry, with a resolution of the board of directors of the lessee company. Where the property is developed in phases, the lessee must also agree to the fees in Section 9(b) (Section 11(b)).

An extension, and any deferment of rent and fines, is given only through an amendment to the lease agreement (Section 16). The amendment must at least state:

• that if the development is not completed and the property opened within the maximum period granted, the ministry may take action and terminate the lease, and the government is not required to pay any compensation;
• the period granted as the construction period; and
• where rent and fines are deferred, the period over which they accrued and the period for payment.

Once the ministry has decided that the conditions are met, it may issue the necessary permits and approve import duty exemptions for development goods before the amendment is signed (Section 16(b)).

Within seven official working days of signing the amendment, the lessee must submit a work plan to the ministry (Section 12(a)). The work plan must include:

• the intended opening date, which must fall within the extended period;
• the dates on which any outstanding documents required under the lease will be submitted;
• where an environmental impact assessment has been approved, the period for which works are permitted or, where no approval has been obtained or the approval has expired, the intended date of submission;
• any mobilisation period required before construction begins; and
• the total period proposed for the minimum construction work.

If the work plan or the outstanding documents are not submitted, the ministry may take action under the lease agreement. If the work plan does not meet these requirements, the ministry may require a revised plan within seven official working days (Section 12(b)). The submission is then treated as complete only from the date the ministry approves the revised plan (Section 12(c)). A construction permit is issued only after the amendment is signed and the ministry has approved the work plan (Section 13).

Failure to open within the extended period

If the property is not opened before the extended construction period expires, or, in a phased development, at least one phase is not opened, all rent and fines accrued up to that time, including the deferred amounts, must be paid to the State within 24 months from the expiry of the construction period (Section 14(a)). If they are not paid within that time, the ministry may terminate the lease (Section 14(b)).

There is one exception. If the ministry issues the operating licence within 15 official working days after the construction period expires, the ministry may exempt the property from Section 14(a) and (b) and allow payment under the option chosen under Section 8(b) (Section 14(c)).

Existing extensions and pending applications

Relief given before the regulation came into force continues in accordance with the relevant lease amendment and the regulation or policy the ministry applied when the last extension was granted (Section 20(b)). These properties are, however, also subject to the special procedures in Section 17 for long-standing undeveloped properties, which may lead to termination without a further opportunity.

Applications made before 10 September 2026 on which the ministry had not decided are treated as applications under the new regulation (Section 20(c)). Those applicants were given 14 official working days from the date of publication to submit the required documents and meet the conditions. The ministry may reject an application where this was not done.

Comment

The regulation makes an extension of the construction period more structured and more costly. The USD 100,000 fee and the CSR contribution apply to almost every extension, and the monthly CSR rate increases the longer the property remains on extension. The 50 per cent threshold at the end of the maximum period means that a lessee who has not made substantial progress faces termination rather than a further extension.

The requirement in Section 4(g) that physical work must have started within the grace period is likely to be the first issue in many applications. Lessees should keep records showing when construction started on site. They should also make the application within the last three months of the grace period, so that the extension runs from the expiry of the grace period rather than from a later application date.

Some issues are not settled by the text of the regulation, in particular the calculation for lagoons which are not yet reclaimed.

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]