How to price your Rental Property

Did you know that prices of houses for rent are controlled and cannot be simply increased arbitrarily here in the Philippines?

House 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.

Breaking down the Rent Control Law

This act applies to all residential units in the National Capital Region and other highly urbanized cities, which rent at or below P10,000; and P5,000 or below in all other areas in the country.

Rent here refers to housing rent alone and does not include water, electricity, utility, or other charges to be paid by the renter.

Scope and limitation:

The Rent Control Act of 2009 (R.A. No. 9653) states that the lessor or the landlord is not allowed to increase the rent more than seven (7) % annually if the unit is occupied by the same tenant. The lessor is only allowed to change the rate for new tenants once the unit becomes vacant.

Further, landlords whose units are dormitories, bed spaces, or boarding houses that are rented to students are only allowed to increase the rent once a year.

Residential units charging monthly rent of up to P4,999.00 cannot increase the rental price by more than two percent (2%) per year. (Example: if rent price is 2,500, by January 2019 - the rent is now 2,550 maximum)

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.

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 Rent Control Law does not apply to units charging a monthly rate of at least P10,000.

The Rent Control Act of 2009 does not cover units under a rent-to-own scheme since a separate agreement for this is made between the owner and the tenant.

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.

Note: You can find further details on the law itself via google.

Investing a property is a smart move for any real estate property owner. It is one way to turn your sitting real estate property to good use and become an income generating asset.

Apart from the current value and the comparable rental rates in your area, at least price reasonably to cover all the monthly expenses associated with your property (mortgage, association fees, repairs & maintenance) plus some profit on top.

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Vernon Joseph Go is an RFP®–Registered Financial Planner | Licensed Real Estate Broker | Content Creator | Podcast-on-the-go Producer & Host