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Rental Law in the Philippines: Things To Know About Tenant Rights

20 May 2022
Rental Law in the Philippines

Most Filipinos resort to living in an apartment as this gives them more convenience and proximity to their workplaces. That is why the government created a law that controls the rental costs of most "Houses for Rent." Unfortunately, not all Filipinos are aware of it.

 

The Philippines' Rent Control Act of 2009 regulates housing rents in the nation, and although most Filipino tenants are unaware of this legislation, it was adopted and has been in place since that year. It is hoped that this "Rent Control Law" would provide some level of security for Filipino tenants all around the country.

 

What is Rent Control Act?

The Rent Control Act of 2009, also known as Republic Act 9653, is the legislation that shields renters, particularly those in the lowest income brackets, against unjustified increases in their monthly rent. It also outlines the procedures for eviction, which must be followed by both landlords and renters.

 

In order for us to know more about the different rights and rules that both tenants and renters have, we covered some of the important points under the Rent Control Act.

 

Rental Law Key Points

Rental Law Key Points

Important points to remember under the Rent Control Act

Whether you are a tenant or a landlord, here are some of the things that you should know about the "Rent Control Act" that you may not be aware of:

 

1. This act only covers monthly rent of Php 10, 000 and below

This means that only homes for rent in Metro Manila charging rent of up to ten thousand pesos per month and houses for rent in other cities, outside of Metro Manila, charging rent of up to P5,000 per month are subject to the Rent Control Law in the Philippines. Take note that the term "rent" here refers only to housing rent, and does not include water, electricity, utility, or any other expenses that may be billed to the tenant.

 

Also, the covered units being pointed out in this law are not limited to "house and lot." As specified by legislation, these units are referred to as:

  • Apartments

  • Houses and/or land or properties where someone else's residence is situated and utilized for residential purposes

  • Buildings or parts thereof, which are being used solely as dwelling units, boarding houses, dormitories, rooms, and bed spaces.

 

In addition to this, as long as the monthly rent does not exceed Php 10,000, condominiums will fall under the third category, making them subject to the Rent Control Law.

 

2. One (1) month advance rent and two (2) months deposit

When it comes to enacting the "1 Month Advance, 2 Month Deposit" provision, the law is unambiguous. Anything more than that is deemed prohibited by law enforcement for residential unit owners.

 

In addition, landlords are required by law to deposit the "2 Months Deposit" in a bank account in the name of the lessor. When the rental agreement ends, any interest collected and accrued on the deposit has to be refunded to the renter, as per law. It is also permissible to use the security deposit and interest accrued to cover the remaining obligations of the lessee, such as unpaid utility bills and other bills for services such as water, electricity, and telephone, or to repair damages and replace broken furniture, accessories, or components in the rented unit.

 

3. Houses whose monthly rent does not exceed Php 5, 000 are only permitted a 2% price increase rents

Residential units charging monthly rent of up to Php 4, 999.00 may only raise the rental price by a maximum of two percent (2 %) every year, as mandated by the Rent Control Act of the Philippines. Any percentage more than 2% is prohibited.

 

4. Pay rent increases of no more than 7 % are permitted for rental homes priced between Php 5, 000 to Php 8, 999

Rental prices cannot rise more than seven percent (7 %) annually for housing units costing Php 5, 000 to Php 8, 999 per month if the renter stays in the same place year after year.

Meanwhile, for new tenants, landlords are permitted to raise the rental rate by more than the 10 % limit stipulated by the landlord's policy. In fact, landlords are free to set their own rental rates, regardless of whether they go higher than the 7% cap set by RA 9653, since they are not banned from doing so when renting to new tenants.

Important Note: The sole exception to this restriction is if the dwelling unit is being provided to students for rent.

 

5. Houses for rent of Php 9, 000 to Php 10, 000 are subject to a maximum 11 % price increase

Houses for rent charging monthly rent of Php 9, 000 to Php 10, 000 may only raise rates by a maximum of eleven percent (11 %) every year, assuming the unit is held by the same tenant, according to the Rent Control Act. Price increases of more than 11 percent are not allowed.

Keep in mind that this restriction only applies to properties with the same housing tenants occupying them. The Rent Control Law allows for a new tenant to be charged a new rate, which might be more than an 11 percent increase.

 

6. The lease contract rental units for students can increase rent only once a year

Regardless of whether or not a new boarder moves in throughout the course of a year, boarding houses, dormitories, rooms, and bedspaces available for rent to students are restricted by the Rent Control Law from raising rates more than once every year.

All these sections and limitation to rental price increase are made to avoid unreasonable rent increases and protects housing tenants from unjust price of rental fees.

 

7. Terminating the lease contract

The landlords and unit owners are also safeguarded by Rent Control Act regulations, aside from the tenants. If you are a lessor, here are the scenarios in which you can lawfully cancel a lease agreement and evict a tenant from the premises.

 

Valid grounds for evicting residential tenants

  • It is against the law for a tenant to sublet their apartments boarding houses without first obtaining formal notice from the owner to do so and has the right to evict tenants.

  • The tenant owes the landlord three (3) months worth of unpaid rent or overdue rental payments.

  • The owner has a genuine need to reclaim or repossess the property in the event of lease contract expiration, provided that the renter was told three months in advance

  • The unit owner must make the necessary repairs to the unit, which is now subject to an order of condemnation by the appropriate authorities, in order to restore the property and make it safe and livable.

  • The lease contract for the rent houses expires.

 

Note that the Rent Control Act clearly prohibits the eviction of a tenant only because the property has been sold or mortgaged to a third party, regardless of whether the lease or mortgage has been recorded or not.

 

8. Penalty for Rent Control Law offenders

Legally, those who violate the Rent Control Act are subject to a fine of not less than Php 25, 000 but not more than Php 50, 000 or imprisonment of one (1) month and a day up to six (6) months, or both, depending on the severity of their offense.

 

Whether you may sue a landlord for violating your rights as a tenant is unclear under the current rental legislation in many cities. There are several ways in which you may resolve the issue with your landlord. If you and your landlord can't come to an arrangement, contact your barangay chairman or lupon, who has the ability to safeguard landlord and tenant rights.

 

Rents exceeding PHP 10,000 and those not covered by the Rent Control Act of 2009, such as commercial spaces and rent-to-own units, are regulated by the Civil Code's rental rules.

 

It is safe to say that millions of Filipino families who are presently forced to live in residential and commercial leases would gain much from legislation that is properly implemented. That is why it is also important for you as a lessor and lessee to know your rights and rules covered in this law.

 

Meanwhile, these days, Filipino can now achieve their long time dream of having their own home by availing rent to own units from Lumina Homes.

 

Lumina Homes offer over 50 communities all over the country as a response to the Housing and Urban Development Coordinating Council (HUDCC) and government agency calls for accessible housing segments through bank home loan or bank financing for Filipinos. They have certain residential units that can be found near other highly urbanized cities making their rent to own scheme one of the most in demand housings in the country.

 

Apart from this, they also offer a wide range of home model units near the National Capital Region that are perfect for leasing businesses, giving its owners an opportunity for passive income.

 

Eager to know about our available rent to own housing models around the country? You can visit our website and try our 360 degree Virtual Tour to learn more!

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