Building Site Next Door? What L.N. 305 of 2026 Changes When Construction Damages Your Home in Malta

Anyone who lives in Malta knows the sound of a breaker hammer next door. With so much demolition, excavation and rebuilding going on, a crack in the wall, a damp patch after excavation or a damaged party wall is a real risk for tenants and owners alike. The question is always the same: who pays, and how quickly.

On 30 October 2026 the Government Gazette carried Legal Notice 305 of 2026, the Avoidance of Damage to Third Party Property (Amendment) Regulations, 2026. It rewrites large parts of the Avoidance of Damage to Third Party Property Regulations, S.L. 623.06, made under the Building and Construction Authority Act. It also repeals the separate Construction Sites Insurance Obligations Regulations, S.L. 623.11, and folds the insurance duty into the main regulations. The Legal Notice contains no separate commencement provision; one of its provisos refers to the position "with effect from the 1st November, 2026".

Here is what the new text means for you if you live, rent or own next to a building site.

What the regulations are for

The amended regulation 2 states the purpose plainly: before any demolition, excavation or construction starts, technically secure methods must be prepared to minimise the risk of damage to third party property or injury to people. "Third party property" now has a full definition: any adjacent property, whether or not it shares a party wall with the site, at the side or the rear, any property above or below the site, and any property within the excavation affected zone that is owned or used by a third party. Public roads, public footpaths and services under public roads are excluded.

The regulations apply to all demolition, excavation and building works, except those listed in a new Eighth Schedule. Excluded are, among others, road works by public entities, internal finishing works such as plastering, tiling, gypsum partitions and waterproofing with handheld equipment, building services works, routine maintenance of external finishes, restoration without stone replacement, and pergolas, canopies and billboards without permanent foundations.

No works without a written clearance

A new regulation 4A sets the rule that no demolition, excavation or construction works may start before the Building and Construction Authority issues a clearance in writing. The clearance is issued only on payment of a fee set in a new Tenth Schedule:

The fees are non-refundable even if the application is withdrawn. The Authority may issue partial clearances for part of the works. Before any clearance, the perit in charge must submit the details of all responsible parties on the Authority's form, and the list of responsible parties now includes a licensed mason and a "Planning Perit", the architect responsible for the design and planning compliance of the project.

Emergency works on a dangerous structure can go ahead without a clearance, but the perit must report them to the Authority within 24 hours, with photos or sketches, a signed declaration taking full responsibility and the details of all responsible parties. If the Authority finds that the emergency was not genuine, it can stop the works, issue an enforcement notice or refer the perit to the Kamra tal-Periti.

€750,000 third-party insurance, now inside the main regulations

The insurance duty is not new: it was introduced by L.N. 38 of 2024 in the regulations now repealed. What L.N. 305 does is move it into S.L. 623.06 as regulation 6(2a). Every construction site must be covered by a valid policy against any loss, damage, injury or death suffered by a third party as a result of the works of the client, the contractors and any sub-contractors.

The key points of the new text:

• the third-party liability limit must be at least €750,000, or another amount set in the insurance contract on a valid assessment of the risks;
• the client must submit a declaration of insurance cover on the Authority's form, issued by an authorised insurer, within the two weeks before works begin;
• the policy must stay in force until the perit submits the certificate of completion of the construction works;
• the insurance contract must be subject to Maltese law and to the jurisdiction of the Maltese courts.

With effect from 1 November 2026, the insurance duty does not apply to sites covered by regulation 26 (works certified as not affecting third parties), to emergency works on dangerous structures, or to works in the Eighth Schedule, unless the Authority decides otherwise.

Condition reports: what you should receive before works start

The developer must have the condition of neighbouring properties recorded before the works begin. Under the amended regulation 7(4), the perit in charge identifies every property next to, above or below the site that is materially affected, and the developer must ensure that the condition reports are submitted to the Authority at least two weeks before works start, with a copy sent to each owner or occupant by registered letter or email.

If the developer's perit cannot get access to your property, or cannot trace the owner, the perit must make a written declaration of the attempts made. Where the owner cannot be found, the declaration must include proof that a notice in the form of the new Ninth Schedule was fixed in a prominent place on the property at least three weeks before works start. The notice gives the planning permit number, the expected start date and the perit's contact details, and asks the owner or occupant to arrange an inspection.

One change helps residents of apartment blocks in particular. Where more than one owner in a complex within the excavation affected zone disagrees with the developer's method statement or with the condition report, they can now jointly engage one perit of their choice to submit a single report setting out their technical concerns or corrections. For anyone living in a block next to a deep excavation, that means sharing the cost of one expert instead of each owner hiring their own.

There is one limit worth knowing: where the planned excavation level is equal to or higher than the foundation level of a neighbouring property, that property is not treated as affected by the excavation, although a condition report must still be drawn up for it.

If damage happens: the claims procedure

The rewritten regulation 6(4) sets the order of steps:

1. Tell the developer first. A third party with a claim for damages must first inform the developer.
2. Two weeks to agree. If the parties do not agree within two weeks of that notification, the third party informs the Authority. The claim must be submitted by a perit, with details of the damage, evidence and an estimate of its value, through the Authority's website.
3. Settlement or escalation. If the parties settle, they submit the settlement agreement to the Authority. If there is no settlement within three months of a legal letter signed by a warranted advocate, the claimant can turn to the new reserve described below.
4. Insurance first. If the developer has made a claim to its insurer and given written proof of that to you and the Authority, you cannot go to the reserve until the insurer has reached a final outcome. The developer must tell you and the Authority what that outcome is.

When the project is finished, the perit in charge must issue the certificate of completion within two weeks and notify every owner and occupant for whom a condition report was made, by registered letter or email. The Authority publishes the completion on its website. That date matters, because it marks the end of the insurance period.

The Industry Guarantee Reserve

The most important addition for residents is a new Industry Guarantee Reserve, set up by new regulations 20A to 20H. It pays claims for damage suffered by third parties as a result of construction activities that were authorised, or that could have been authorised, under the Act.

How it works:

• Funding: all or part of the clearance fees paid to the Authority. The minister sets the share and may order a one-time payment if funds run low.
• Committee: five members appointed by the minister for three years, including a perit, a warranted advocate and a person qualified in finance or insurance, plus a non-voting secretary. Members with a professional link to the works or the claim must withdraw.
• Speed: the committee meets at least once a month and must decide each case within 30 days of referral, extendable once by up to 30 days in exceptional cases.
• The claim: made on the Authority's form, with a perit's report including photographic evidence of the damage and its cause, and information on what you have done to remedy it, including any communication or legal action against whoever caused the damage.
• Decision: by majority, with reasons given for a refusal. The decision is final, but a new claim can be filed on new information or facts.

The limits

Under regulation 20E, no claim can be made if the compensation sought exceeds €15,000, or if more than two years have passed since the damage occurred. The committee may, after consulting the Authority's board, recommend payment beyond either limit. If the actual damage turns out higher than the award because of something you could not have known when you claimed, the committee may add up to 10% of the claim amount.

If the reserve pays, you must sign an agreement with the Authority that assigns to it your rights against whoever caused the damage, up to the amount paid. The Authority then recovers the money from the responsible party. The committee must publish an annual report with the number and value of claims, the success rate, the compensation paid and the reserve's financial position.

Government works

A rewritten regulation 26 lets the Authority's board exempt a government entity from requirements, including the insurance duty, where applying them would be unreasonable. Any such exemption must be in writing and must include an undertaking by the government entity to assume full liability for the risks and damage that the insurance would have covered.

What this means if you live in Malta

For tenants and owners, three practical points follow from the text:

• Keep the paperwork. The condition report you receive before works start is your baseline. Check it, and if you disagree, act within the period the regulations allow, jointly with your neighbours if you live in a block.
• Small claims now have a route. For damage up to €15,000, the reserve offers a decision within 30 days once the earlier steps are exhausted, without a court case. The price is paying a perit for the report and an advocate for the legal letter.
• Larger claims still go through the developer and the insurer. The €750,000 policy is there for those, and the courts remain open.

For anyone choosing where to live, construction remains part of the picture, as our guide to Malta's neighbourhoods and our reality check on the building boom explain. Buyers should add one item to the checklist in the property buyers' guide: whether a neighbouring plot has a permit, and if so, whether works have been cleared. On a crowded island, as our piece on population density argues, living close to change is normal. The new rules give neighbours a clearer way to deal with the damage it can cause.

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If you are buying or renting in Malta and want to understand the risks around a specific property, book a consultation.