A huge majority of inhabitants in Metro Manila and other key cities in the Philippines prefer renting rather than buying homes. One reason is the costs associated with property ownership such as monthly amortizations for properties on mortgage, taxes, and maintenance. There’s also the growing trend of a mobile lifestyle, popularized by entrepreneurial millennials. Living in a condo in Metro Manila offers the best of city living at reasonable costs.
Tenants can cut the cost and time of daily commute since most condo projects are strategically located near business districts and commercial establishments. The top-notch lifestyle amenities such as fitness centers, spas, and swimming pools provide a reprieve from the fast-paced urban life.
To a hopeful tenant, renting condominiums is the same as renting an apartment. However, this is not the same. Unlike apartments, condominiums have a homeowner’s association, whereby owners have a say on the different changes within the entire condominium complex. So if you are just a tenant, you do not get to say a thing. Renting a condo unit requires a careful understanding of the overall tenancy act of the Philippines.
If, however, you want to earn income passively, leasing out your condo unit is a great way to do it. But there are times when the tenant can cause house problems, in which case you might have to give them the boot for violating the lease agreement. Or maybe you are a tenant that is being harassed by the landlord to leave? Whether you are planning to rent a condo, an apartment, or a room, here are tenant rights in the Philippines that you must keep in mind.
What is the law?
Republic Act No. 9653, otherwise known as The Rent Control Act of 2009, is "an act establishing reforms in the regulation of rent of certain residential units, providing the mechanisms therefore and for other purposes." The Rent Control Act is a set of laws that aims to protect both sides, i.e., landlord and renters, from conflicts when it comes to fulfilling each other’s obligations as stipulated in the legal contract for leasing.
The provisions of the law cover limitations on increases in rent, the requirement of deposit, assignment of lease or subleasing and ground for judicial ejection. It’s important that you understand your Philippine tenant's rights and obligations as a tenant or lessee to avoid unnecessary suits.
In fact, according to a 2015 census of the Philippine Statistics Authority (PSA), 12.1% of the population is at least renting a room. Moreover, 97% of tenants pay around Php10,000 for monthly rent. Hence, it would only be right for lawmakers in the Philippines to create a rental law in the Philippines that serves to protect both landlords and tenants—especially those in the middle to lower-income brackets.
What does the rental law in the Philippines cover?
The Rent Control Act of 2009, which we’ll refer to as the “law” for brevity, covers all apartments, houses and/or lots, building houses, dormitories, rooms, bed spaces and business areas primarily used by the owner and his family as a dwelling. The law explicitly excluded motels, motel rooms, hotels, and hotel rooms. Your DMCI condo unit falls under the category of building houses, thus covered by the law.
RA 9653 covers all residential units in the National Capital Region and Metro Manila along with other highly urbanized cities with rent of one peso (P1.00) to ten thousand pesos (P10,000) every month. On the other hand, rented units such as motel rooms, hotel rooms, and even rent-to-own units are not covered. Rent-to-own schemes are not covered nor affected by the rental law in the Philippines since there will be a transfer of ownership which means it is far from simply renting out a unit.
What government agency has the authority to regulate rent?
The authority to continue regulating rent in residential properties covered by the law is the Housing and Urban Development Coordinating Council (HUDCC). The agency may extend the law and apply revisions as far as the rent increase limit is concerned. In adjusting the allowable limit, the HUDCC shall take into consideration statistics on rental units, rate, inflation rate, and rental price index.
If you have queries about the law including any amendment, the HUDCC is the right place to call.
What does the rental law in the Philippines say about rent increases?
The law, dated July 14, 2009, states that no increase in rent shall be imposed within one year from the effectivity of the law. The law specifies that the annual increase of the rent after December 31, 2013 shall not be more than seven percent (7%) of the actual rent. Moreover, rooms rented out to students can only be increased once a year. Increments done by more than seven percent (7%) are considered illegal and may be subject to court action against the lessee. Make sure that you have a copy of the agreement and the new rental law in the Philippines so you may talk to your landlord about it.
From January 1, 2016 to December 31, 2017, monthly rent up to PhP3,999 shall not increase by more than 4% per year. Those renting out properties for a monthly rent of Php4,000 to Php10,000 shall not rise by more than 7% per year as long as the lease contract involves the same tenant.
This new provision applies to all residential units, including DMCI properties, covered by the law.
How much advance rent does the rental law in the Philippines allow?
Generally, a tenant must pay his rent in advance within the first five days of every current month or the start of the lease contract date. If the contract provides for a later date, this shall prevail over the stipulations of the law. An owner/lessor cannot ask for more than one month's advance rent and more than two months' deposit from the tenant. Thus, you’re only obliged to hand over a maximum of the three-months worth of rent upon contract signing.
The deposit shall be kept in a bank during the lease contract period. This amount, including earned interests, shall answer for any unpaid bills or property damage done by the tenant. If no such costs were incurred, the deposit and the interests shall be returned to the tenant.
Does the rental law in the Philippines permit a tenant to lease out the property?
Yes, a tenant can lease or sublease the entire property or a portion of it provided there is written consent by the owner/lessor. Otherwise, subleasing is prohibited and shall be a ground for ejectment.
The rental law in the Philippines is clear on this point: A tenant is only allowed to sublease the rental unit provided that there is written consent from the owner of the unit. Everything should be made on paper and not on words alone. If not done properly, this may be grounds for eviction. Notably, if you are merely letting a guest or relative stay for the night, you do not need written consent from your landlord. That said, you still need the approval of the unit owner.
What are the other grounds for judicial ejectment?
You, as a tenant, may be ejected from the property after failing to pay rent for three months. If the owner/lessor refuses to accept your payment, you may consign your payment to the court, the city or municipal treasurer, the barangay chairman, or in the bank in the name of and with notice to the owner/lessor. The consignation must be done within one month after his/her refusal to accept the rent.
You can also be ejected upon the expiration of the lease contract, repossession of the property by the owner/lessor subject to conditions, to respond to the need for repairs as ordered by appropriate authorities.
Can a tenant be ejected in the event the property is sold or mortgaged?
No, a tenant cannot be ejected in the event that the property is sold or mortgaged. It’s imperative to know tenants’ rights in the Philippines including your right against illegal ejectment.
Section 10 of the Act provides that “No lessor or his successor-in-interest shall be entitled to eject the lessee upon the ground that the leased premises have been sold or mortgaged to a third person regardless of whether the lease or mortgage is registered or not.” Hence, a tenant may not be ejected from the property on the ground that it has been sold or mortgaged to another person. This prohibition is absolute whether the lease or mortgage is registered or not.
Can the tenant and the owner/lessor agree to a rent-to-own scheme?
Yes, the owner/lessor may offer a rent-to-own agreement to the tenant, evidenced by a written agreement, which shall eventually transfer ownership of the property to the latter. A lease under a rent-to-own scheme is not covered by the Rent Control Act, thus the parties can agree on the monthly rent.
Renting in the Philippines is expected to remain the preferred mode of housing accommodation by both Filipinos and foreign residents. It’s more practical and suits a mobile lifestyle, which is gaining popularity anywhere in the world. Choosing a suitable apartment, house or condo is not enough. Know the tenant rights you should be aware of when renting.
For Landlords: The following are the legal reasons to evict a tenant:
Section 9 of the Rent Control Act provides for the grounds for Judicial Ejectment:
- When the tenant leases/subleases the residential units – including the acceptance of boarders – without the consent of the owner/lessor;
- Failure to pay rent for three (3) consecutive months;
- When the owner/lessor has a legitimate reason to repossess his/her property for her own use or for the use of his/her immediate family member as a residential unit;
- When the lessor needs to make necessary repairs to the leased premises which is the subject of an existing order of condemnation by appropriate authorities in order to make the premises safe and habitable;
Notably, aside from the above-mentioned, the reasonable rules and regulations that you and your landlord have agreed upon will serve as a guide on what you can and cannot do while renting the property. For sure there are tenant eviction laws in the Philippines that you need to keep in mind so you can stay for the duration of your contract. It can be anything from the guest policy, noise levels in your unit, and renovating without permission.
For Tenants: How can you protect yourself from eviction if you aren’t covered by the Act?
The Act is meant to protect tenants in the middle to lower-income bracket, as such the Php10,000 limit. What if your rent is higher than the threshold and your landlord sends an untimely eviction notice form? How can you protect yourself from tenant eviction if you aren’t covered by the Rent Control Act?
It is the tenant’s right to register the lease before the Registry of Deeds where the property is located, which will be reflected in the title of the property. Why do this? The Civil Code says that the owner or landlord cannot terminate the lease if the rented property has been registered in the Registry of Deeds, thus preventing tenant eviction. That’s unless the reason the landlord wants to evict a tenant falls into one of the five legal reasons stated above or as agreed upon contract.
Article 536 of the New Civil Code likewise gives protection to the tenant, the provision states: “In no case may a possession be acquired through force or intimidation as long as there is a possessor who objects thereto. He who believes that he has an action or a right to deprive another of the holding of a thing must invoke the aid of the competent court if the holder should refuse to deliver the thing.”
What this means is that if the landlord, through force or intimidation, forcibly deprives you of the possession of the leased property, you may invoke the aid of the competent court (MTC) for forcible entry within one year from the date when you were deprived of possession. If one year has lapsed, your recourse would be accion publiciana.
What are the updates of the Rent Control Act?
The Housing and Urban Development Coordinating Council (HUDCC) extended the Rent Control Act to December 31, 2020. With this extension, the HUDCC updated some parts of the act regarding the increase in rental fees after lease agreement renewal. Landlords shall only be allowed to increase the rent of a residential unit by:
- Not more than two percent for those paying a monthly rent of less than Php4,999.
- For those paying Php5,000 to Php8,999, landlords can only apply up to seven percent as long as the unit is leased by the same tenant.
- Landlords can only apply more than an 11 percent increase in monthly rent for tenants paying a monthly fee of Php9,000 to Php10,000. Like number 2, this can only be done if the unit is rented out to the same tenant.
With these updates, it would be a wise idea for both landlords and tenants to do a legal contract review to avoid problems with payments in the future.
Grounds for Tenant Eviction
The rental law in the Philippines also stated that ejection of tenants is prohibited even if the rental unit has already been sold to a third person. It all boils down to the existing lease agreement and if the lease agreement states that the rental should last until December, the new owners should respect the agreement. Other legal reasons for tenant eviction include the tenant’s inability to pay three months of rent, subleasing the rental unit without approval of the landlord, expiration of the lease agreement, repairs and repossessing of the property by the owner. Repossession may be made by any immediate member of the lessee’s family, including the spouse, descendants, and others who are related by blood or by affinity.
As a lessor or a tenant, you would always want to know what is the best course of action to preserve or protect your right. The Rent control act serves as a protection for both the tenant and the landlord. Here are a few takeaways that you might want to always take note of:
- Always check the condominium building, reevaluate the lease, and ask about the parking conditions. It is most important to have a copy of the signed lease agreement and the condo rules and regulations. Ask the landlord about the maintenance fees, and the amenities, because violating a leasing agreement may affect your overall standing as a renter.
- Learn about the Rental Control Act. Under the Rent Control Act, the annual increase of the rent after December 31, 2013, shall not be more than seven percent (7%) of the actual rent. Moreover, rooms rented out to students can only be increased once a year. Increments done by more than seven percent (7%) is considered illegal and may be subject to court action against the lessee. Hence, this is beneficial if you are a student or a low to middle-class earner as the incremental increase cannot in rent not go over and beyond seven percent (7%) otherwise, this would be illegal.
- Clarify other inconsistencies in the condo house rules and the rental law in the Philippines for residential renters before signing the lease. You may think of it as a tedious task but in the end, this will leave your entire residential tenancy experience a whole lot lighter.
To learn more about DMCI Homes pre-selling and ready for occupancy projects, units for lease, and special promos, log on to www.dmcihomes.com or call (632) 5324-8888. You can also check out https://leasing.dmcihomes.com/ for currently available condos for rent.