Recto: Rent Control Law in effect

The new Rent Control Law passed by Congress has been signed into law and has taken effect.

An estimated 15 million residential tenants nationwide are expected to benefit from the new law, which prevents landlords from imposing exorbitant rent increases on tenants.

Five million of the 15 million tenants are located in Metro Manila while the remaining 10 million are spread throughout the country.

The cap on rent increases stands at 10 percent, but the covered monthly rent was hiked to P10,000 for urban areas and P5,000 for the other areas, up from P7,000 and P4,000, respectively.

Sen. Ralph Recto, the principal author of the measure in the Senate, said the decision to keep the cap on increases at 10 percent was made to encourage housing developers and lessors who want to improve their properties.

"Investors in the housing sector will also find the new law reasonable as the cap on rent increase is still at 10 percent, whereas a lower cap would have favored tenants more," Recto said.

"The new law covers a higher rent than the previous law that lapsed in December 2004," he added. "The higher monthly rent covered by the new law ensures that those covered (under) the old law will still get coverage, even if their rents have increased over time."

Sen. Rodolfo Biazon, chairman of the Senate urban planning, housing and resettlement committee, said the new rent control law was harmonized with other laws affecting tenants and investors in the housing industry.

Under the new law, Recto said, "landlords are advised to collect only two months’ deposit and one month advance rent. Not one centavo more. The (prevailing) practice is that landlords demand the payment of a three-month deposit and two months advance rent from new tenants."

This provision will protect a significant number of potential tenants who are made to spend more by landlords as a prerequisite for approval of their tenancy.

Recto also noted that the grounds for judicial eviction are now more specific to help prevent disputes between the tenants and landlords.

He said the grounds for judicial eviction under the new rent control law "are much clearer such as the non-payment of rent for three consecutive months, among others. 

"The old (rent control) laws generated conflicts, as when landlords deceptively evicted tenants saying the units would be used by their family but (the landlords) actually would rent it out to others within the year," he said. "This legislation balances the rights and privileges of owners and tenants."

"The P10,000 monthly rent covered by the new law is also a VAT-exempt transaction, another protection granted to tenants," he added. The VAT, or value-added tax, was recently applied to many business sectors previously exempt from the levy.

"This (law) has been awaited by at least 15 million residential tenants including more than a million students in dormitories in Manila’s university belt," Recto said. "The newly-signed law could greatly help avert disasters waiting to happen like the recent death of students trapped in a burning dormitory in Manila."