Is there Rent Control Law in the Philippines?

Did you know that there is a law controlling rent prices of most “Houses for Rent” in the Philippines and that the landlord cannot simply increase the monthly rent arbitrarily?

Housing rentals are covered by the Philippines’ Rent Control Act of 2009, a law which may not be familiar to most renters in the Philippines, but actually has been approved and in effect since 2009. This “Rent Control Law” is essentially intended to protect millions of Filipino renters across the country.

According to data from the Philippine Statistics Authority (PSA) in 2018, there are at least 1.5 million renters nationwide, and 97% of these renters are renting units with rates costing P10,000 per month and below.

The Rent Control Law, therefore, provides a much needed relief to millions of Filipinos still without their own homes and left with no choice but to rent property.

The Housing and Urban Development Coordinating Council (HUDCC) is the government agency in charge of overseeing the implementation of the Philippines’ Rent Control Law or the 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”.

RA 9653 was approved in 2009 and expired on December 31, 2013. Since then, the HUDCC has been extending the provisions of the Act — and its latest extension is from January 1, 2018 until December 31, 2020. This means the applicable rules and regulations of the Rent Control Law — its most salient points explained below — are valid until December 31, 2020.

Here are ten (10) important items from the “Rent Control Act” which you probably are not aware of but ought to know, regardless if you are a renter or a landlord.

1. Only houses with rent P10,000 and below are covered by law

The Rent Control Law or RA 9653 covers residential units in these locations charging the following rental amounts:

  • (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).

This simply means the Rent Control Law applies only to houses for rent in Metro Manila charging rent of up to Ten Thousand Pesos (P10,000) per month and houses for rent in other cities, outside Metro Manila, charging rent of up to Five Thousand Pesos (P5,000) per month.

Rent here refers to housing rent alone and does not include water, electricity, utility, or other charges that may be charged to the renter. (See related post: Taxes and Fees when Buying Property in the Philippines)

The covered units do not refer to “house and lots” solely. Specifically, these units as defined in the law include:

  • 1. Apartments;
  • 2. Houses and/or land on which another’s dwelling is located and used for residential purposes; and
  • 3. Buildings or parts thereof, which are being used solely as dwelling units, boarding houses, dormitories, rooms, and bed spaces.

Condo units fall under number 3 above, which means they are covered by the Rent Control Law as long as the monthly rent is P10,000 and below.

2. Units with monthly rent above P10,000 are exempted

Housing units that charge rental rates beyond Ten Thousand Pesos (P10,000) per month are NOT covered by the Rent Control Act.

The law, in effect, exempts these units from coverage, which means whatever amount of rent and escalation rates, if any, will depend on the agreement between the landlord and tenant.

The owner may charge any amount he or she wishes as long as the prospective tenant will accept it. The parties are also free to negotiate and agree on rate increases and frequency of such increase, since there is no law governing units with monthly rent above P10,000.

3. Rent-to-own units, commercial spaces, motels, and hotels also not covered

Rented units which are used as motels, motel rooms, hotels, and hotel rooms are not covered by RA 9653.

Commercial spaces, including those used for home industries, retail stores, or other business purposes, if the owner and his or her family actually live therein and use it principally for dwelling purposes, are also not covered.

Units under a rent-to-own scheme also do not fall under the Rent Control Act because they are governed by separate contracts. Typically in this contract, the landlord may engage the tenant in a rent-to-own agreement that will allow the transfer of ownership of the rented unit to the tenant at a later date. This is a separate, binding agreement between the lessor and lessee and, as such, is exempted from the Rent Control Act.

4. Illegal to charge beyond “1 Month Advance, 2 Months Deposit”

The law is clear regarding the imposition of the “1 Month Advance, 2 Months Deposit” rule. Owners of residential units cannot demand more than that; anything beyond it is considered illegal.

In addition, the law requires landlords to deposit said “2 Months Deposit” in a bank under the lessor’s name. Interestingly, all interest that accumulated and accrued on the deposit shall be returned to the tenant at the expiration of the rental contract, according the law.

The deposit and accrued interest may be used, as allowed by law, to pay the remaining obligations of the lessee, including unpaid bills on water, electricity, telephone, and other utility bills, or for the repair of damages and replacement of broken furniture, accessories, or components in the rented unit.

These portions of the law are surely noteworthy, but we’re sure very, very few unit owners abide by this rule. We’ve heard stories of landlords requiring “2 Months Advance, 2 Months Deposit”, sometimes even more — clearly a violation of the law — but no one seems to have been prosecuted for this violation.

Image Credits: Camella Homes (Vista Land & Lifescapes VLL)

5. Maximum 2% price increase for Houses with Rent below P5,000

As prescribed by the Rent Control Act, residential units charging monthly rent of up to P4,999.00 can only increase the rental price a maximum of two percent (2%) per year. Anything above 2% is not allowed.

For example:

From January to December 2018, Spiderman rented the unit of Lady Vermin with monthly rent of P2,500. On January 2019, Lady Vermin is increasing the rate to P2,550 per month. Is this allowed?

Answer: Yes. The rent may be increased by a maximum of 2%, that is, a maximum of P50 (computed as P2,500 x 2%) since the rent is less than P5,000. Therefore, by January 2019, the new monthly rent of P2,550 that will be charged to Spiderman is allowed by law.

6. Maximum 7% price increase for Houses with Rent from P5,000 to P8,999

Housing units charging monthly rent 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.

Example #1:

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.

Example #2:

Pepper Potts was paying rent of P8,000 per month to landlord Thanos before deciding to leave the unit. Iron Man saw the vacancy and was interested to move in, but Thanos told him the monthly rent is now P9,000 — an increase of 12.5% from the P8,000 rent paid by the previous tenant, Pepper Potts. Is this allowed?

Answer: Yes, landlords are allowed to increase the rental rate, beyond the set percentage limit, to be charged to a new renter. Even if it’s beyond the 7% maximum rate prescribed by RA 9653, this is allowed since the landlord is not prohibited from charging a new rental rate to a new renter.

The only exception to this rule is when the housing unit is offered for rent to students. (See No. 8 below)

7. Maximum 11% Price Increase for Houses with Rent from P9,000 to P10,000

According to the provisions of the Rent Control Act, houses for rent charging monthly rent of P9,000 up to P10,000 are only allowed to increase rates by a maximum of eleven percent (11%) per year, if the unit is occupied by the same tenant. Any price increase beyond 11% is not allowed.

For example:

The monthly rent for a condo unit in Makati is P9,000. What is the allowed rental increase for next year if the unit will be rented by the same tenant?

Answer: P990.00, because rent may be increased by a maximum of 11% (that’s P9,000 x 11% = P990.00). This means the new rental rate for next year can be increased to a maximum of P9,990 per month (that’s P9,000 original rent + P990 increase).

Again, take note that this limit applies to units occupied by the same tenants. A new rate, which could be higher than an 11% increase, may be charged to a brand-new renter as this is allowed by the Rent Control Law.

8. Boarding house or bedspace for students can increase rent only once a year

As per the Rent Control Law, 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:

Gamora offers bedspace to students at P1,000 per month. When the previous student-tenant left in April, she increased the rate to P1,500 per month. One month later, she found another bedspacer, Rocket Raccoon and she charged him P1,500 per month. After only 3 months, Rocket Raccoon left. His friend Groot was interested to bedspace, but according to Gamora, the rate has increased to P2,000 per month. Is this allowed?

Answer: No. The law states that no further increase on the same year is allowed for units offered for rent to students. Since the rate was already increased in May when Rocket Raccoon moved in, no additional increases will be allowed in the same year — even if if there will be a new tenant.

Take note that this strict rule only applies to units offered for rent to students.

9. Valid grounds for evicting tenants

Aside from tenants, landlords and unit owners are also protected by certain provisions of the Rent Control Act. What are cases wherein the landlord is legally allowed to terminate the lease contract and to eject the tenant?

Here are valid grounds for ejecting renters from the property:

a. The tenant sub-leases the unit (that is, offers the unit for rent to other renters) without the explicit written permission or consent of the owner;

b. The renter has three (3) months worth of unpaid rent;

c. After the expiration of the rent contract, the owner has a legitimate need to repossess the property for his/her own use or that of his/her family as a residential unit, provided that the renter was notified three months in advance;

d. The unit owner needs to make necessary repairs on the unit, which is the subject of an existing order of condemnation by appropriate authorities, in order to repair the property and to make it safe and habitable; and

e. The lease contract has expired.

Take note that the Rent Control Act expressly disallows the eviction of the renter merely on the basis that the property has been sold or mortgaged to a third party, regardless of whether the lease or mortgage is registered or not.

10. Penalty for violators of Rent Control Act

The Philippine Rent Control Law is definitely commendable, but we believe its effectiveness may be hampered because of three (3) things:

First, tenants must be made aware that such a law exists so that tenants will know their obligations and rights. More information and public awareness campaigns should be conducted by government agencies in order to inform Filipinos about this law.

Second, tenants who may have complaints about their landlords must know the proper avenue where they can air their grievance. Where exactly can tenants go if they have complaints or issues with their landlords about unauthorized rent increases? Honestly, we ourselves don’t know.

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.

According to the law, violators of the Rent Control Act face a fine of not less than P25,000 but not more than P50,000, or imprisonment of one (1) month and one (1) day up to six (6) months, or both. These are decent penalties butt we hope the law can have more teeth in running after unscrupulous landlords who exploit their tenants.

An effective implementation of the law can definitely benefit millions of Filipino families who currently have no choice but to rent a house or condo unit. Here at PinoyMoneyTalk, we simply hope and pray that the government can provide more avenues to educate Filipinos about their rights and obligations, both as landlords and as tenants.

NOTE: Prior to December 31, 2017, the implementing guidelines issued by HUDCC impose a limit on residential units charging monthly rent of up to P3,999.00 of a maximum of 4% 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 before December 31, 2017 were not allowed to increase rates by more than 7% per year, if the unit is occupied by the same tenant. These rates have now been changed as explained in the latest and updated provisions above.

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109 thoughts on “Is there Rent Control Law in the Philippines?”

  1. HI po, nag re rent po sa apartment for 7 years na at a rate of 9k a month. Mag increase na raw kami to 10k na ok lang naman sa akin matagal tagal na rin. Nasabihan raw nila ako nung Jan. 2019 pa pero nakalimutan ko naman, at pag nag papadala ako ng deposit slip sa landlord ko for 9K a month, hindi naman sya nagreklamo until now. Pinasabi daw sa balae ni landlord, walang paper na may signatures kami as proof. Dapat daw mag retro-payment ako from Jan 2019. At sabi ng landlord ko dapat daw nga 20% yearly ang increase ko na nasa contract daw namin nung una akong lumipat nung Oct. 2012. Wala naman akong nakitang 20% dun. Ok lang naman sa akin yung 1K na increase, pero yung 20% after this year na upa hindi po ako makapayag. Yung lawyer na lang daw nya ang kakausap sa akin kasi next year daw yung lawyer na mag collect ng rent. Para rin maayos na raw ang BIR issues nya kasi malaki raw ang VAT na dapat mga umuupa ang nagbabayad. Kasi naman nung nag start ako mag rent nung 2012, mga ilang months lang ang OR na issue sa akin, tapos until now hindi na sya nagbigay ng OR sa lahat ng mga tenants dito sa compound. PLease advise sa mga karapatan ako as tenant. Salamat.

  2. Good day. May paupahan po ako. Isang 6k at isang 7k.
    Na mapping po yung bldg ng city government.
    Kailangan po ba namin talaga ng bussiness permit eh wala pang 15 k yung paupa namin.
    At nag babayad naman ako regular ng 22k na tax sa munisipyo.

  3. Hello po lilipat po sana ako ng room sa building na inuupahan ko.Kaso ang gusto ng may ari agaran in that week kinausap ko nag caretaker sbiko magppack ako ng gmit kung pde sunday me magpack kc me work ako gbi nko dumarating sunod na week hakutin ko lahat.ayaw daw pumayag ng may ari ng bahay kv sayang daw ang araw.Nakiusap ako kaso ibingay sa iba sabiko sige na nd nako lilipat ayusin nalang ang mga tulo sa room ko wala akong utang sa kanila lagi me on time mgbyad.pero dpat daw irrenovate nag room ko ililipat ako from 6500 sa room na 7k ayaw ko pumayag.nagexpire contract ko nung aug 16pinapirma ako ng bagong contract na before 4 katao pde sa room now 3nlang daw at may byad na 300 pag may pang apat wala silang notice na magging 3nlang pinasaynan skin ng caretaker internal arrangement nlang sana namin.Then balewala na daw yun pinasaynan nya kc ala p syn angay ari at kung ayaw ko daw lumipat eh umalis nalang ako.nsstress ako nhaharass ako sa gngawa nila since tulo ang problem s labas ang problema gusto ivacate ko agad ang room eh considering na me work ako mapasok kods ko work ko monday-sat.Nagalit ako tinawagan ko maya ri hinharass kakao ako eh kaso sbi ng maya ti ayusin n namin ng caretaker ayaw pmyag ng caretaker kc yun daw sbi ng maya ri sbiko brgy nlang kmi mgusap harassment ang gngwa nila skin.Now may i know all my rights about thay svenario?typo

  4. Sana meron makasagot sa akin concern nangugupahn kmi studio type 4800 po yung upa times 57 ang tubig kht mern nmn metro ang tubg at times 24 ang meralco dhl submeter ito..
    Ang binayad lng muna nmn 1buwan lng muna.. Pero bgo kmi lumipat nagsbi na ako sa kptid ng mayari na cra ang pinto ng banyo natatanngal na sa pagkkbit at doorknob nia cra din..
    Ang sbi papaaus.. Nag byd muna ako ng tubig at kuryente pra sa buwan na konsumo nmn.. 2buwan lng kmi dun dhl dw mern na daw lilipat itong ka tapos ng buwan.. Mern kmi outstanding bill which bbyrn muna nmn yung nakonsumo nmn itong buwan na huli 2 buwan ako di byd sa bhy. Sbi ko bbyrn ko bgo kmi umalis ang problema minamdali na kmi umalis kc mern na daw lilipat. So bbgyn nmn siya byd nmn nakonsumo nmn ng 1buwan itong tumkbong araw pa nmn dun.. Sbi di dw p rn nia I ibgy mga gmit nmn hanggng di nmn byd ang kabuoan.. Sana mern po sumgt dito…

  5. Get your facts straight. The Act No 9653 says about the coverage (applicability), that all residential units in the National Capital Region AND other highly urbanized cities, the total monthly rent for each of which ranges from One peso to Ten thousand pesos. And additionally, residential units in all other areas, the total monthly rent for each of which ranges from one peso to five thousand pesos. And this “without prejudice to existing contracts”.

    So this act applies to all residential units to rent in any highly urbanized city up to 10,000 PHP, and residential units to rent in any other area up to 5,000 PHP. Seems like a pretty important mistake to me.

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