Issue link: https://maltatoday.uberflip.com/i/1435908
15 maltatoday | WEDNESDAY • 8 DECEMBER 2021 NEWS Energy audit shambles found inside building and construction agency MATTHEW VELLA AN inspection by the National Audit Of- fice has revealed weak controls and inex- istent audit trails on energy performance certificates for properties and permits is- sued by the Planning Authority. Malta's Building and Construction Agency is still working on the planning permits for properties filed in 2017, but it cannot establish whether all permits have been backed up by a mandatory energy performance certificate (EPC). The BCA has to issue EPCs, a rating of a building's energy efficiency. The EPC – since 2012 obligatory for all new- builds, rentals and transfers – is pro- duced after a professional assessment by a warranted architect or engineer. Even banks are bound not to issue sanc- tion letters for property loan unless an EPC is presented. At a fee of €75 per EPC, which the as- sessor pays on behalf of the applicant to the government, the annual estimate for government should be at some €2.5 million. Yet during 2020, a total of 9,619 EPCs were registered – at an aggregate value of €721,425. Since 2012, over 80,000 EPCs have been registered. But the NAO found a weak control environment and a lack of audit trail where PA applications are concerned or EPCs for rental properties. And any type of alteration to a building has to be authorised by the PA, and this necessi- tates an EPC following a major renova- tion or alteration. The BCA could not even determine how many of the 57,000 planning per- mits issued in 2017 had acquired an EPC. "BCA was only made aware when an EPC form was submitted by the appli- cant or when the actual EPC was ana- lysed following receipt. Thus, there is the risk that, in certain cases, the re- spective certificate is not obtained, and no enforcement measures can be taken. Apart from loss of revenue, Govern- ment will not have the relevant statis- tics," the NAO said. While EPCs received are hard copies, there is no cross reference to the related PA number, making it close to impossi- ble to find a particular EPC. As a result, the BCA is not in a position to know which PA applicants carried out an EPC and how many EPCs are still pending. "A BCA official estimated that, based on the number of property sales, ap- plications for development, and regis- trants renting property for tourism pur- poses, there are around 85,000 pending EPCs still to be carried out, to the tune of more than €6 million," the NAO said. When then NAO requested the list of those PA applications the BCA analysed during 2020, the agency was still comb- ing through a four-year backlog. "Unless the applicant complied and carried out the EPC, timely action was not being taken. Furthermore, the pro- cess to establish whether an application for alteration to property requires an EPC is very time consuming and, at this pace, the backlog of PA applications cannot be cleared." While the BCA issues notification let- ters to PA applicants to carry out an EPC, the agency has no means to link each PA application number with an EPC by using the same PA number, to exclude those who already obtained the certificate. "Additionally, the process of issuing a second notification letter is done manually, since there is no system in place to trigger it automatically when a certificate is not duly issued. Out of the 2,460 PA applications re- lating to 2016 that required an EPC, a number of notification letters were still to be submitted, although the BCA was not aware of the exact number of certif- icates actually obtained. The slow pace at which notification letters are submitted triggers a lot of delays in the process for government to ensure compliance and collect what is due. In relation to 2017, no notifica- tion letters were sent for the first five months. As for rental properties, the EPC should be presented by the lessor to the lessee, both for long and short-term rentals. However, no control for com- pliance in this respect is in place. While the notification letters sent to PA applicants requiring an EPC men- tion that a fine of between €1,500 and €5,000 will be applied to those who do not comply, no such enforcement was made to date. "The process that is undertaken when PA applications for changes to existing property are filed, is dependent on one officer and his judgement. This implies a lack of segregation of duties, which undermines internal controls and the efficiency of the process. It also increas- es the possibility that human error re- mains undetected." BCA four-year backlog on verifying EPC means agency is not aware how many property owners have carried out mandatory energy audit