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A Point-by-Point Review of Tenant’s Rights According to Philippine Property Law

by DMCI Homes Leasing on August 1, 2016 | Categories: Real Estate Industry

A huge majority of inhabitants in Metro Manila and other key cities in the Philippines prefer renting 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. Among all types of housing accommodation, condo for lease ranks on the top of online searches.

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, spa and swimming pools provide reprieve from the fast-paced urban life.

If you’re planning to rent a condo, an apartment or a room, here are tenant rights in the Philippines to keep in mind.

What is the law?

what is the law
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Republic Act No. 9653, otherwise known as The Rent Control Act of 2009, was enacted primarily to regulate rent of certain residential units. The provisions of the law cover limitations on increases in rent, requirement of deposit, assignment of lease or subleasing and ground for judicial ejectment. It’s important that you understand your Philippine tenant’s rights and obligations as a tenant or lessee to avoid unnecessary suits.

What does the law cover?

what does the law cover
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The Rent Control Act of 2009, which we’ll refer to as the “law” for brevity, covers all apartments, house and/or lots, building houses, dormitories, rooms, bedspaces and business areas primarily used by the owner and his family as 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.

What government agency has the authority to regulate rent?

authority to regulate rent
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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 considerations 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 law say about rent increases?

Rent Increase
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The law, dated July 14, 2009, states that no increase in rent shall be imposed within one year from the effectivity of the law. After this period until December 31, 2013, any increases in rent shall not be more than 7% annually as long as the same tenant leases the property. This provision has expired in the end of 2013, but was extended with certain modifications.

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 involve the same tenant.

This new provision applies to all residential units, including DMCI properties, covered by the law.

How much advance rent does the law allow?

How much advance rent
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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 advance rent and more than two months deposit from the tenant. Thus, you’re only obliged to hand over a maximum of 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 law permit a tenant to lease out the property?

lease out the property
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Yes, a tenant can lease or sublease the entire property or a portion of it provided there is a written consent by the owner/lessor. Otherwise, subleasing is prohibited and shall be a ground for ejectment.

What are the other grounds for judicial ejectment?

grounds for judicial ejectment
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You, as a tenant, may be ejected from the property after failure 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?

sold or mortgaged
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It’s imperative to know tenants’ rights in the Philippines including your right against illegal ejectment. Under the law, 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?

rent to own scheme
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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 as 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.

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