Eight months after the controversial decision, the government still doesn’t have a clear understanding of the extent of unauthorized construction and the amount of confiscated surface. The hastily initiated action from the previous autumn has been exhausted before the elections, while the prosecution has not initiated criminal investigations against some of the builders reported by the Ministry of Interior. So far, only three police officers have been punished.
At the entrance of the construction site belonging to “Xheluks Construction” and “Laxmi Real Estate & Investment” companies near the Dry Lake, a notice of confiscation has been placed. Police tapes can be seen just a few meters further, at the second construction site of the same company, this time in collaboration with “Devis Construction.”
The Six-story buildings, with 2, 3, and 4 underground parking levels, owned by the well-known businessman Julian Morina, were reported by Deputy Prime Minister Belinda Balluku for being constructed, one entirely without a permit and the other in violation of the construction permit. Both of these constructions, located in one of the most luxurious areas on the outskirts of Tirana, have undergone confiscation procedures based on Council of Ministers Decision No. 589, dated 07/09/2022, “On rules and procedures for confiscation for public interest, constructed without a permit for profit purposes.”
The controversial decision, published by the government in early September of past year, essentially involves the confiscation of all unauthorized constructions or additional floors built for profit purposes in violation of the construction permit.
According to the confiscation decisions published on the official website of the Territorial Development Agency, three confiscation decisions have been taken against businessman Morina for multi-story constructions without permits in the heart of Tirana. Similarly to Morina, dozens of other businessmen have also built for profit purposes without permits or by exceeding the construction permit in the most expensive areas of Tirana.
More than 8 months after the government’s flashy initiative, it seems that the action, which started with a “firm hand,” has fizzled out. The initiative, which gained momentum in September 2022, stalled on the eve of the elections. Throughout this year, no confiscation decision has been made for additional floors and unauthorized constructions, and the latest decision published on the official website of the Territorial Development Agency is dated December 28, 2022.
On the official website of the Territorial Development Agency (TDA), 26 confiscation decisions have been published regarding thousands of square meters constructed without permits, but for only 15 of them, the seizure decision has been signed, making it unclear what will happen to the others.
One of them, “Syri i Tiranës,” has decided to donate the square meters built without permits, while “Sallillari” contested the decision and appealed in court.
Experts argue that this hastily undertaken law, which has been forgotten, is an electoral law that favors builders and increases the risk of money laundering.
The data made available through information requests demonstrate that the institutions are unable to provide transparency regarding the identified areas of unauthorized constructions or the confiscated ones.
On the other hand, the data provided by the Prosecutor’s Office of Tirana shows that investigations have not been initiated against two builders.
Builders are evading justice
“There will be no tolerance for any builder,” said Deputy Prime Minister Belinda Balluku on September 7, 2022, when announcing the Council of Ministers’ decision on the confiscation of unauthorized constructions for profit.
The data obtained through information requests shows that some businessmen have been favored by the law.
According to the Ministry of Interior, there are 15 suspected properties with additional areas undergoing confiscation procedures, which have been referred to the prosecution.
“All identified cases have been referred to law enforcement structures for criminal investigation,” the Ministry of Interior responded.
The data provided by the Tirana Prosecutor’s Office shows that some businesses have escaped justice, as no criminal investigations have been initiated against them, while there are also cases where referrals have been made this year. Out of 9 confiscation decisions in Tirana, only 8 investigations have been opened by the prosecution.
According to the response from the Tirana Prosecutor’s Office, two new investigations have been opened this year for the company “Xheluks Construction,” despite having three confiscation cases. The third investigation for this company dates back to 2021 and involves Julian Morina’s construction near Lake Liqeni i Thatë. Therefore, illegal construction was allowed to continue for over a year, even though the state was aware of it.
According to the Tirana Prosecutor’s Office, no cases related to the villa complex being constructed in Selitë by the company “Aleksandros” have been registered in the register of complaints and criminal proceedings.
The hidden truth behind the figures, how many square meters were confiscated
Institutions do not provide transparency regarding the total square meters confiscated as a result of this law.
Even the National Territorial Development Agency is unable to provide data but suggests referring to the decisions published on the official website, specifically at point 1 of each decision.
After examining the confiscation decisions published on the NTDA website, it appears that out of 25 confiscation decisions, only 10 of them specify the surface area to be confiscated. For these 10 decisions, the confiscated area is calculated to be 11,628.66 m2, while in the remaining 15 confiscation decisions, it is only mentioned that they have constructed more than 10% of the construction permit, making it unclear what the confiscated area is as a result of this law.
Currently, the confiscated constructions, based on the decisions of the NDTA, are nothing more than fenced construction sites where no work is being done.
Only the National Territory Protection Inspectorate provided a vague response regarding the number of constructions sent for confiscation to the NDTA.
“Through the inspections conducted and in implementation of the Council of Ministers’ decision, the National Territory Protection Inspectorate has submitted a proposal for confiscation for 25 objects, for which the National Territorial Council (NTC) has issued a decision for each object,” stated the National Territory Protection Inspectorate in a written response to Investigative Network Albania.
However, while the National Territory Protection Inspectorate has identified 25 problematic objects with several additional floors in violation of permits, the National Territorial Council (NTC) has only signed 15 confiscation decisions, making it unclear what will happen to the remaining objects. Furthermore, even for these decisions, the process is not final as the issue of ownership has not yet been resolved.
Following a complaint to the Commissioner for the Right to Information, the State Cadastre Agency (ASHK) stated that the process has “stalled” because the Technical Secretariat of the NTC has not yet issued the ownership certificate, which will determine the percentage of ownership between the developer and the state. Currently, the Cadastre only includes a note indicating the confiscation decision for these properties.
“The NTC has forwarded 15 confiscation decisions for public interest to ASHK. These decisions, in the current phase, have an informative character as not all relevant procedures by the NTC for issuing the utilization certificate have been completed, both for the part of the object in accordance with the permit and for the confiscated part,” says the Cadastre.
The illegal buildings were sold
During a verification at the construction sites of these companies, the majority of apartments were sold while still under construction.
“There are very few unsold units, and the price per square meter starts from 1,600 euros for the apartments located in the northern part. The same applies to the surrounding buildings; most of them were sold during the construction phase,” say the employees of the administration of one of the companies, which is constructing adjacent to “Xheluks.”
The same situation is observed in the confiscated building on “Myslym Shyri” street, constructed by “ArbTrans 2010,” where until 2018, Arben Maloku, an official of the Socialist Party who served as the administrator of the Zall-Herr Administrative Unit for several years, was in charge. This building has 2,700 square meters of unauthorized construction.
“All the appartments have been sold. Any remaining unit that hasn’t been sold is in high demand,” says one person closely connected to the developer during a phone conversation.
Despite being surrounded by the yellow tape of confiscation, the person clarifies that residents have purchased units in this building for 2,500 euros per square meter, while a garage costs around 40,000 euros.
The same situation occurs with some of the confiscated properties, which, despite being blocked, continue to be listed for sale by real estate companies.
Some of the expensive properties under seizure have recently been put up for sale with an average price of 1,600 euros per square meter.
The sales contracts for apartments sold during the construction phase were the argument used by the party “Sallillari” in court, as they contested the confiscation decision. They submitted 16 sales contracts to the court, indicating that the construction was not yet completed. However, the court dismissed “Sallillari’s” claims, ruling in favor of the government and upholding the decision to confiscate the illegally constructed building.
What will happen to these illegally built floors that have been sold from the foundation? None of the institutions can provide an answer and they delegate responsibility.
The Ministry of Infrastructure, the Ministry of Interior, and NTDA evade providing an answer regarding the fate of the residents who have purchased units in these buildings, justifying that it is “not within their competence.”
Meanwhile, the Agency for the Development of Territory shifts responsibility to the Ministry of Finance, but the latter states that it falls under the competence of NTDA.
Even the State Cadastre Agency denies any responsibility when asked if any such property has been mortgaged.
Pre-purchase in favor of the developers
Although the government claims that the decision was taken to curb illegal constructions, in reality, the Council of Ministers’ decision allows developers to legalize their unauthorized constructions at market prices. The price per square meter, as declared by Prime Minister Edi Rama and Deputy Prime Minister Belinda Balluku, would be determined by the state and an additional coefficient would be applied.
However, it seems that these are just plans on paper, as the government remains silent and does not provide transparency regarding the specific prices per square meter set so far. All questioned institutions deny having the authority over this matter.
The Ministry of Finance states that it is currently reviewing 4 requests made by developers for pre-purchasing their constructions, but there have been no decisions made yet.
“There are only 4 pre-purchase requests under review, without any decision made yet, as we are waiting for documentation from the applicants and the State Real Estate Agency,” responds the Ministry of Finance.
“There is a lack of transparency; institutions are not providing information, while the pre-purchase price is a negotiation process among them, disregarding the market,” explains the economics expert Preçi, who sees pre-purchasing as a favoritism.
Over the span of 11 years, 13,000 citizens have faced criminal proceedings for unauthorized constructions, mainly for residential purposes, with the highest number in Tirana.
According to the General Prosecution Office, for the period between 2012 and September 2022, 8,940 individuals have been indicted for the offense of “Illegal Construction,” out of which 5,965 have been convicted.
However, unlike the force of the law, which punishes those who construct without permission for housing purposes, developers who have violated permits for profit-oriented constructions are favored by the law, giving them the opportunity for pre-purchasing.
This is the reason why experts believe that this Council of Ministers’ decision has a discriminatory character, favoring businessmen who construct for profit.
“Clearly, with this decision, a double standard is created. Those who construct for profit have the possibility to pre-purchase the unauthorized construction at minimal cost, while citizens who have constructed for housing purposes are arrested,” expresses lawyer Adriatik Lapaj.
“The executive has favored the group of illegal developers for profit-oriented purposes, instead of prioritizing social groups who have constructed for their own or their family’s housing purposes,” says another lawyer, Gëzim Allaraj.
According to experts, by providing the opportunity for pre-purchasing, the state is not only legalizing something illegal but also increasing the profits of developers.
“Developers will prefer the pre-purchasing of these constructions because it maximizes their building, sales, and profits,” says Arben Malaj, suggesting that this property could have been used for various purposes, including social ones, such as cultural centers, not just social housing.
Point 10 of Decision 589 regarding the confiscation of unauthorized constructions states that funds from pre-purchasing unauthorized constructions will be deposited in the Treasury of the Bank of Albania. Even Prime Minister Edi Rama, after the implementation of the decision on confiscations, stated that the funds to be secured from this initiative would be deposited in the Treasury of the Bank of Albania and used for expropriations. However, it seems that this is also an empty promise.
When asked by INA MEDIA about the funds deposited with it, the Bank of Albania responds that no Treasury branch has been opened for this purpose thus far.
“We would like to inform you that the Bank of Albania does not have a specific account opened for this purpose,” says the Bank of Albania.
Experts view pre-purchasing with suspicion since, according to them, it paves the way for money laundering.
“The problem of money laundering is evident. The most interested parties are representatives of national and international organized crime, as well as a number of officials who have managed to profit through the misuse of power and fines imposed on businesses through corruption,” says Zef Preçi, Director of the Center for Economic Studies.
Entrepreneur Zef Shtjefni also warns of the risk posed by illicit money. According to him, it is precisely this money that affects the high prices of housing, as developers’ primary goal is not to sell them but to launder money.
“About 20% is built with illegal money, which, once invested in construction, is not in a hurry to be sold but awaits even better prices. And finally, the Albanian youth, with the wages they receive today, cannot afford to buy a 1+1 apartment for 30 years,” says entrepreneur Shtjefni, who explains that high prices also come about because 40% of apartments are owned by landowners who are not taxed.
The controversial Council of Ministers’ decision clashes with the Criminal Code, which stipulates penalties in the form of fines, imprisonment, or even confiscation for offenders. According to experts, the decision also contradicts the Law on Planning and Development of Territory since Article 52 of this law defines penalties for unauthorized constructions.
“According to Article 116 of the Constitution, Council of Ministers’ decisions should not conflict with the acts above them, namely laws and codes. Seen from this perspective, as long as the Penal Code classifies unauthorized construction as a criminal offense, any intervention with lower acts creates constitutional problems,” explains lawyer Adriatik Lapaj.
Lawyer Gëzim Allaraj states for INA that this government decision contradicts the principles of justice and the rule of law.
“Through this decision, the executive openly violates the penal sanctions, which it exceeds, even though they have special, legal, and higher powers than administrative acts,” says Allaraj.
Although Prime Minister Rama publicly accused that unauthorized constructions in Tirana were being protected by individuals in uniform and called for the iron-fist punishment of those who turned a blind eye to the construction of thousands of square meters without permits, only 3 police officers have been punished.
“In total, 3 police employees have been disciplined with the measure of Expulsion from the police,’ and 1 police employee has been disciplined with the measure of ‘Postponement of promotion for 2 years,’ as they are suspected of allowing construction in violation of the law,” reports the Police Oversight Agency.
In a response dated November 24, 2022, the State Police clarifies that additional measures have been taken, such as recommending increased attention to raise awareness among police officers about professional duties related to preventing illegal constructions.
“The majority of disciplinary measures resulting from suspicions of allowing unauthorized constructions by competent authorities are in the Police Commissariat No. 1, Tirana. For each case, the materials have been referred to the prosecutor’s office for further action,” says the police.
Meanwhile, the Police Oversight Agency states that it has sent 4 criminal referrals to the prosecutor’s office, but none of them belong to Tirana.
“The referrals were made as follows: 2 cases to the Vlora Prosecutor’s Office, 1 case to the Elbasan Prosecutor’s Office, and 1 case to the Shkodra Prosecutor’s Office,” responds the Police Oversight Agency.
Unlike the police, there are no dismissed inspectors from the State Inspectorate of Territorial Development and Urban Planning (IKMT) for these abuses. Also, none of the institutions questioned provide an answer regarding the amount of fines imposed on offenders, but they all delegate the responsibility to each other.
The rapid pace of construction
Albania is facing a construction boom. According to data from INSTAT, from 2018 until the end of 2022, 6,065 construction permits were issued, translating into over 10 million square meters of total construction.
Especially in Tirana is experiencing the largest urbanization, as in the last 5 years it has increased by over 5.9 million square meters.
However, despite the rapid pace of construction, Tirana ranks among the most expensive cities in terms of purchasing property. The Bank of Albania announced that in the first half of 2022, housing prices in the country increased by 39.2% compared to 2021. The highest increase was recorded in Tirana, reaching up to 40%, and in the coastal areas, where prices increased by up to 60%.
“For the year 2023, I don’t think Albanians will be able to buy properties at a cheaper price than in 2022. It’s not the ordinary people or families who are buying. It’s foreign money coming in and purchasing in Tirana,” says real estate expert Ervin Demirxhiu.
Ky shkrim është pjesë e projektit që mbështetet financiarisht nga Zyra e Mardhënieve me Publikun e Ambasadës së SH.B.A. në Tiranë. Opinionet, gjetjet, konkluzionet dhe rekomandimet e shprehura janë te autor-it/ve dhe nuk përfaqesojnë domosdoshmërisht ato të Departamentit të Shtetit. / This article is part of a project that is financially supported by the Public Relations Office of the US Embassy in Tirana. The opinions, findings, conclusions, and recommendations expressed are those of the author(s) and do not necessarily represent those of the Department of State.