Understanding the Rent Control Act in the Philippines

For anyone renting or planning to rent a property in the Philippines, understanding the Rent Control Act is crucial. This law aims to protect tenants from unreasonable rent increases while ensuring landlords can still fairly profit from their properties. Let’s break down the key aspects of this act to help both tenants and landlords navigate their rights and responsibilities. 

What is the Rent Control Act? 

The Rent Control Act of the Philippines refers to Republic Act No. 9653, also known as the "Rent Control Act of 2009", as extended by subsequent regulations. It governs rental pricing, increases, and disputes for residential units within specific rent ranges, particularly in urban areas. 

The law primarily covers: 

- Residential units with a monthly rent of up to ₱10,000 in Metro Manila. 

- Units with a monthly rent of up to ₱5,000 in other cities and municipalities. 

 Key Provisions 

1. Limit on Rent Increases 

   Landlords cannot increase rent by more than 7% annually for covered properties, provided the same tenant occupies the unit. 

2. Protection Against Eviction 

   Tenants cannot be evicted except under specific circumstances, such as: 

   - Non-payment of rent for three consecutive months. 

   - Subleasing without the landlord’s consent. 

   - The landlord needing the property for personal use or renovations. 

3. Advance Payments and Deposits 

   - Landlords are allowed to collect up to one-month advance rent and two months’ deposit. 

   - Deposits must be returned to the tenant upon moving out, minus any deductions for damages. 

4. Rental Contracts 

   Both tenants and landlords are encouraged to have a written rental agreement specifying the terms and conditions of the lease, including rent, duration, and responsibilities. 

 Who Benefits from the Rent Control Act? 

The act primarily benefits low- to middle-income families, students, and employees who rent affordable housing. It ensures they are not priced out of their homes due to sudden, excessive rent increases. 

 What the Rent Control Act Doesn’t Cover 

The Rent Control Act does not apply to: 

- Commercial properties. 

- Residential units rented out for over ₱10,000 per month in Metro Manila and ₱5,000 per month in other areas. 

- New leases not covered by existing agreements. 

 Recent Updates 

While RA 9653 officially expired, the Philippine government often extends similar provisions to address housing affordability. As of today, tenants and landlords should stay updated with the latest housing and rental policies implemented by the Housing and Land Use Regulatory Board (HLURB) or other government bodies. 

 Tips for Tenants 

- Always sign a written agreement and understand its terms before moving in. 

- Keep records of your payments and communications with your landlord. 

- Report any violations of the Rent Control Act to local housing authorities or barangay offices. 

 Tips for Landlords 

- Familiarize yourself with the Rent Control Act to avoid legal disputes. 

- Clearly communicate rental terms and increases with tenants in writing. 

- Maintain the property to ensure tenants receive value for their rent. 

 Final Thoughts 

The Rent Control Act is a critical safeguard for renters and a guide for landlords in managing rental properties. Whether you’re a tenant or landlord, understanding this law can foster a fair and harmonious rental relationship. 

Stay informed about changes to rental policies and consult legal or housing experts for specific concerns. After all, a well-informed rental community benefits everyone. 

Source: Zigguratrealestate.ph

UK landlords sell in a hurry amid fears of capital gains tax increase

The proportion of former rental properties for sale is the highest on record, an increase that may be driven by landlords’ fears of an increase in capital gains tax in the budget, according to Rightmove. Eighteen per cent of properties for sale were previously on the rental market, compared with 8 per cent in2010.

The property website said that landlords’ fears that the budget on October30 would result in an increase in capital gains tax — a tax on the profit made when an asset is sold — could be behind the surge.

London has emerged as a hotspot, with 29 per cent of homes for sale having previously been rental properties. Scotland and the northeast follow, with a proportion of 19 per cent. The percentage has been slowly increasing for months. The previous five year average for homes switching from the rental market to the sales market is14 per cent, according to Rightmove. Tim Bannister, its property expert, noted that while the trend was increasing, it did not signal a “mass exodus of landlords”.

The number of new properties entering the sales market has risen by 14 percent compared with a year ago, a period when the market was subdued by high inflation and peak mortgage rates.

Compared with 2019, the last year before the pandemic, the number of homes for sale this year has increased by 3 per cent. Bannister said: “In recent years it has become more attractive for some landlords to leave the rental sector rather than to continue to invest in it, due to rising costs, taxes and legislation.

We’ve seen over the last few years how the supply and demand imbalance can contribute to rising rents, so there is a worry that without encouragement for landlords to stay in rather than leave the rental sector it is tenants who will pay the price.” Sir Keir Starmer has warned that the budget will be “painful” and that those with “the broadest shoulders should bear the heaviest burden”.

Rachel Reeves, the chancellor, has declined to rule out an increase in CGT. At present CGT is levied at rates of between 10 and 28 per cent. An increase could lead to a “significant rise” in the tax burden, Marc von Grundherr, director of the estate agent Benham &Reeves, said. “This would be yet another blow to those who provide vital housing stock that is sorely needed within the rental sector, following a string of legislative changes already introduced in recent years to dent profitability

Source: The Times

Metro Manila office rental prices decline despite improved vacancy rate

Vacancy rate in Metro Manila’s office market improved in the second quarter of 2024, yet rental prices for office spaces have continued to decline since 2023, according to real estate services and investment firm CBRE Philippines.

“This may look good on the upper hand, but zooming into the prices of each sub-district, we have been noting a trend of declines or reductions in rates as well,” CBRE Philippines Research Head Samantha Laureola said during a briefing last week. 

Metro Manila’s fair market rents (FMR), which represent the typical rental prices for office spaces, have decreased by 2% to 19% across various sub-districts from the first quarter of 2023 to the present. 

The Bay Area’s FMR fell 19% from the first quarter of 2023, followed by a 13% decrease in Makati A&B premium office buildings. Alabang also went down 10%, North Bonifacio declined 3%, and Makati Prime went down 2%.

Meanwhile, Quezon City rose 9% and McKinley inched up by 6%. Ortigas also increased by 2%, and Bonifacio Global City (BGC) rose by 0.4%.

“So lower rates, potentially more attractive lease structures for clients, higher demand, and lower vacancy overall,” she added.

The vacancy rate went down to 17.8% in the second quarter of 2024 from 19.7% in the same period last year.

CBRE also revised its initial forecasted vacancy rate from 18.8% to 22.6% by the end of the year due to the Philippine Offshore Gaming Operators (POGO) ban. 

Makati Prime had the highest FMR in the second quarter of this year at P1,289.01, followed by BGC at P1,170.88, while North Bonifacio and the Bay Area logged P1,076.88 and P702.64, respectively. 

Makati A&B recorded an FMR of P789.40, McKinley at P834.06, Ortigas at P764.39, Alabang at P671.40, and Quezon City at P735.35.

“Lower FMR for most of the major Metro Manila markets as developers continue to provide aggressive rates to spur transactions,” the firm said.

On a quarter-on-quarter basis, CBRE Philippines Director of Advisory and Transactions Services Garri Amiel Guarnes said the Bay Area had the highest reduction of 7.3% in FMR in the second quarter of 2024.

“That’s a lot to do with the transactions, government take-ups within the Bay Area, and the high number of square meters being taken by the government offices,” he said.

The office market logged 257,200 square meters (sq.m.) of office leases for the second quarter, driven by government take-ups that accounted for a 26% share. 

Some of the biggest government leases during the first half went to Filinvest, including the National Bureau of Investigation in Cyberzone Bay City Towers and the Department of Trade and Industry in Filinvest Buendia. 

Despite CBRE’s expectation that the vacancy rate by year-end will hit 43% due to the POGO ban, the Bay Area was the top district for the second quarter of 2024 with 83,400 sq.m. of leases in the country.

SERVICED OFFICE VACANCY RATE HIT 20.6%

Meanwhile, the vacancy rate of Metro Manila’s flexible market — comprising coworking spaces, serviced offices, and short-term leases — surged 20.6% to 7,000 vacant seats in the second quarter due to the opening of new sites across the area, CBRE Philippines said.

This figure was 6.75% lower than the 14% vacancy rate in the same period last year, and lower than the 17% recorded last quarter.

CBRE Senior Research Analyst Angela Joyce Sumalinog said the increase in vacancy was driven by the opening of new sites in Metro Manila, where Fort Bonifacio recorded the lowest vacancy rate at 11%.

North Bonifacio’s vacancy rate fell to 10% in the second quarter, while BGC also decreased to 10%. McKinley’s vacancy rate rose to 18%.

The vacancy rate in Makati increased to 19%, Ortigas doubled to 24%, and Quezon City reached 22%. Meanwhile, the Bay Area and Alabang saw increases to 25% and 52%, respectively.

“Another factor that we’re seeing that can affect the flex market would be comparing serviced offices versus vacated spaces with quality fit-outs. The former would often have a premium on rates of 50% to 80% over three to five years,” Ms. Sumalinog said.

CBRE reported that Metro Manila rates range from P5,000 to P36,000 per seat per month.

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Source: Business World