(2018) Rent Control Law for “Houses for Rent” in the Philippines
Did you know that prices of houses for rent are controlled and cannot be simply increased arbitrarily?
Housing rentals are covered by the Philippines’ Rent Control Act of 2009, a law intended to protect millions of Filipinos renting houses.
The Housing and Urban Development Coordinating Council (HUDCC) is in charge of overseeing the implementation of the Rent Control Law, also known as Republic Act (RA) 9653 or “An Act Establishing Reforms in the Regulation of Rent of Certain Residential Units, Providing the Mechanisms Therefore and For Other Purposes”.
The law was approved in 2009 and its provisions have been recently extended by HUDCC for a period of three years, from January 1, 2018 until December 31, 2020.
Here are seven (7) salient items from the Rent Control Law that you ought to know.
7 Important Provisions of the Rent Control Law
1. Which Houses for Rent are covered
The Rent Control Law covers all residential units:
- (a) in Metro Manila with monthly rent between one peso (P1.00) and ten thousand pesos (P10,000) per month; and
- (b) in other highly urbanized cities in the country, with monthly rent between one peso (P1.00) and five thousand pesos (P5,000).
Simply speaking, the law applies to houses for rent in Metro Manila charging monthly rent of up to P10,000 and houses for rent in other cities charging monthly rent of up to P5,000. Rent here refers to housing rent alone and does not include water, electricity, utility, or other charges to be paid by the renter. (See also: Taxes and Fees when Buying Property in the Philippines)
2. Maximum Price Increase of Houses for Rent below P5,000
Residential units charging monthly rent of up to P4,999.00 cannot increase the rental price by more than two percent (2%) per year.
From January to December 2018, the monthly rent for a house is P2,500. By January 2019, the rent can only be increased by a maximum of 2%, that is, a maximum of P50 (computed as P2,500 x 2%). Therefore, by January 2019, the new monthly rent can only be a maximum of P2,550.
3. Maximum Price Increase of Houses for Rent from P5,000 to P8,999
Housing units charging monthly rental rates of P5,000 to P8,999, meanwhile, are not allowed to increase rates by more than seven percent (7%) per year, if the unit is occupied by the same tenant.
A condo unit in BGC is charging P8,000 monthly rent. By how much can the rent of this condo be increased next year? (See also: Tips when Buying Condo Units in the Philippines)
Answer: P560.00, because rent can only be increased by a maximum of 7%. (P8,000 x 7% is P560.00). Thus, for next year, the condo owner can raise the rental rate charged to the tenant up to P8,560.00 per month.
4. Maximum Price Increase of Houses for Rent from P9,000 to P10,000
Houses for rent charging monthly rent of P9,000 up to P10,000 are not allowed to increase rates by more than eleven percent (11%) per year, if the unit is occupied by the same tenant.
The monthly rent for a condo unit in Makati is P9,000. What is the allowed rental increase next year?
Answer: P990.00, because rent can only be increased by a maximum of 11%. (P9,000 x 11% is P990.00). This means the new rental rate for next year can be increased to a maximum of P9,990 per month.
5. Rent-to-own units, Commercial Spaces, Motels, Hotels, etc.
Rented units which are used as motels, motel rooms, hotels, and hotel rooms are not covered. Commercial spaces are also not covered by this law. Units under a rent-to-own scheme also do not fall under the Rent Control Act since they have separate contracts.
6. Units offered for rent to students
Boarding houses, dormitories, rooms, and bedspaces offered for rent to students can only increase rents once a year, even if a new boarder occupies the unit within the same year.
For example, if there was a rent increase in June and a student boarder left in July and was replaced by another student boarder in August, the rent cannot be increased for the new boarder. The law states that no further increase on the same year is allowed for units offered for rent to students. Take note that this strict rule only applies to units offered for rent to students.
7. One Month Advance, Two Months Deposit
Owners of residential units cannot demand more than one-month advance rent and more than two-months deposit. Anything more than this limit is considered illegal.
Violators of the Rent Control Law face a fine of P25,000 to P50,000, or imprisonment of one month and a day up to six months, or both.
UPDATE: On November 2017, the HUDCC has approved a resolution adjusting the maximum rates allowed for rental price increases during the period January 1, 2018 to December 31, 2018. The new rates are shown in the items above.
Previously, prior to December 31, 2017, residential units charging monthly rent of up to P3,999.00 can only increase rents by 4% or less per year, if the unit is occupied by the same tenant. At the same time, housing units charging monthly rental rates between P4,000 and P10,000.00 are not allowed to increase rates by more than 7% per year, if the unit is occupied by the same tenant. These rates have been changed as explained in the provisions above.
Can rent be increased if there’s a new tenant?
Yes, landlords are allowed to increase the rental rate, beyond the set percentage limit, to be charged to a new renter.
For example, if Person A is paying rent of P8,000 per month and decided to leave the unit, the landlord can look for a new tenant and charge the new tenant P9,000 — a 12.5% increase. Even if it’s beyond the 7% maximum limit prescribed by the law, this is allowed since the landlord is not prohibited from charging a new rate to a new renter.
The only exception to this rule is when the housing unit is offered for rent to students. (See No. 6 above)
What’s the rule for housing rental rates above P10,000?
The Rent Control Law does not apply to units charging a monthly rate of at least P10,000.
To reiterate, the law only covers residential units in Metro Manila with rental rate of P10,000 or below (and in other urbanized cities in the Philippines with rental rate of P5,000 or below).
The owner of the house, charging rent of more than P10,000, is free to increase the rate as he or she pleases, and only has to negotiate directly with the tenant.
How effective is the Rent Control law?
The Philippine Rent Control Law is indeed commendable, but we believe its effectiveness may be hampered because of three things:
First, tenants must be made aware that such a law exists so that they will know their rights. More information and awareness campaigns should be conducted in order to publicize this particular law.
Second, tenants who may have complaints about their landlords must know the proper avenue where they can air their grievance. Where exactly can housing tenants go if they are having issues with their landlords regarding unauthorized rent increases?
Lastly, complaints must be dealt with swiftly and properly by the appropriate government agency so that justice can be served for both landlord and tenant.
An effective implementation of the law can definitely benefit millions of Filipino families renting houses. Here at PinoyMoneyTalk, we simply hope the government can provide more avenues to educate Filipinos about their rights as housing tenants.
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