New amendments to the COVID-19 intervention measures – an important step in stimulating construction investments?

New amendments to the COVID-19 intervention measures – an important step in stimulating construction investments?

Author: Blaž Ogorevc

On 28 April 2020, the Slovenian Parliament adopted an amendment of certain parts of the Act Determining the Intervention Measures to Contain the COVID-19 Epidemic and Mitigate its Consequences for Citizens and the Economy.

The amendment, which came into force on 1 May 2020, also includes some new measures in the field of Slovenian construction regulations, summarized in this post.

The recent amendment of the basic act in the field of construction law – the new Construction Act was implemented mid 2018 – made substantial steps towards the simplification of process of obtaining a building permit. The reforms applied to the steps before filing the application for the building permit (consultancy role of the administrative authorities was enhanced, possibility of pre-decision regarding location conditions was introduced), the administrative process itself as well as the conditions for the permit (joinder of processes when environmental impact assessment is required, informatization of administrative process; shortened or simplified procedures for some construction types), and also to the legal remedies (limitation of possibility to renew the process). The reforms were essentially aiming at encouraging real estate investment, also – or even predominately – foreign investments, consequently stimulating the economy and reaching the goals of the state residential policy.

After nearly two years since the enactment, it can be established that the process of obtaining a building permit, whilst relieved of some administrative restraints, is still too lengthy, specifically when compared to some other more investment-friendly countries in the region. Even in times of economic growth this is a matter of concern, but today, when the consequences of the COVID-19 epidemics are leading towards an economic crisis, this has become all the more important. Further modifications of the construction legislation are now made in order to expedite and additionally simplify the process of obtaining a building permit. This might be an important piece of the puzzle which helps reduce the drop in the economic activity.

The highlights of the changes are given below. These are not comprehensive, but could nevertheless contribute to the stimulation of construction investments. As the impact of the epidemics on the economy shall be long lasting, the amendments should, in my view, be adopted for a period exceeding the epidemics itself. Currently, it seems that this is not dealt with appropriately and this topic shall need to be addressed in the near future.

Simplified conditions for process initiation

The Construction Act provides which documentation shall be presented by the investor when filing for the building permit. The amendments reduce these requirements as that:

  • The investor does not need to prove the right to build (title or another suitable property right) when filing for a building permit;
  • The right to build must be proven before the building permit is issued; if it is established by the authority that this condition is not met, the investor is given a 15-day remedy period.

The said changes will enable the investors to start obtaining the building permit even before the title is obtained and paid for. Modern complex real estate transactions might now be differently structured; if a suitable structure can be agreed with the seller of the land, this might reduce the investment risk to a certain extent for some investors.

Acceleration and rationalization of the procedure

The new regulations introduce the following measures aimed at reducing the time between the filing and the issuing of the building permit and its finality:

  • Two processes can be lead in parallel: (i) evaluation of an application for a building permit in an integrated procedure and (ii) procedure of prevalence of other legal interest;
  • Introduction of principle of non-duplication; consents obtained in the previous procedures shall be considered in the integrated process, provided that the intervention into environment is not changed in excess of permitted tolerance;
  • All judicial procedures started due to legal remedies filed in the procedure of issuance of building permits, shall be considered urgent matters and shall be handled with priority.

Moreover, the changes reintroduce the concept known by the previously applicable Construction Act; the investor will, at its own risk, be allowed to start the construction based on the decision which is final in administrative procedure (dokončna odločba) even if the decision has not become judicially final (binding).

Role of other authorities in the process

With aim to simplify the process there are also some other changes introduced concerning the role of other authorities in the process of issuance of a building permit. Opinions of various agencies and institutions which are required in the process, will have to be more precisely substantiated and will have to contain solution driven proposals or guidelines for remedying the concerns expressed therein. This should improve the professional competence of opinions and reduce the legal and professional uncertainty.

Representation of environmental and conservational interests

As this is usual and appropriate for the protection of public interest, specifically the interest of environment protection and nature conservation, the non-governmental organizations (NGOs) are given a benefit of presumption of legal interest in certain administrative procedures. On this ground, the NGOs can provide an efficient counterweight to the private capital interest; however, in the name of balance, this legal benefit can also be exploited by the ad hoc established NGOs which would vexatiously file legal remedies and delay the administrative procedures.

The changes introduce additional conditions which have to be fulfilled by the NGOs in order to be eligible to participate in the procedure of issuance of building permits. The new criteria is already criticised by the NGOs for being too stringent and for being adopted without a proper public discourse and consideration of public interest.