Economy


Rent control extension to take effect in January




Posted on December 29, 2015


THE HOUSING and Urban Development Coordinating Council (HUDCC) said an extension to the expiring Rent Control Act will take effect for two years from the start of 2016.

“The HUDC Council implements the continued regulation of rent to cover all private residential units in the country with monthly rent of (up to) P10,000,” HUDCC Resolution No. 1, approved on June 8, read.

“After the expiration of Republic Act No. 9653 or the Rent Control Act of 2009 on December 31, 2015, rent control shall continue for a period of two years or from January 1, 2016 to December 31, 2017 using the inflation rate for 2014 of 4.1% as basis for adjustment,” according to the resolution, which was published in a newspaper earlier this month.

Under the resolution, the maximum rent increase for any residential unit is not more than 4% for those paying a monthly rent ranging from P1 to P3,999 per month and 7% for those paying P4,000 to P10,000, as long as the unit is occupied by the same lessee.

“When the residential unit becomes vacant, the lessor may set the initial rent for the next lessees: Provided further that in the case of boarding houses, dormitories, rooms and bedspaces offered for rent to students, no increase in rent more than once per year shall be allowed,” it said.

The regulation will not apply to new residential units offered for lease which will be constructed after the approval of HUDCC Resolution No. 1.

HUDCC Secretary-General Cecilia S. Alba, in a text message to BusinessWorld, cited a study the council commissioned which showed that 82.5% of renters or 1.27 million out of 1.5 million pay less than P4,000.

“For the rate of increase for this group, inflation was identified as the basis,” she said.

“However, so as not to disenfranchise those who are already covered by the rent control, the HUDC Council resolved to continue covering them at the existing rate -- at 7% for those renting not higher than P10,000,” Ms. Alba said.

The Rent Control Act grants HUDCC the authority to regulate the rental of certain residential units, to determine the period of regulation and its subsequent extensions if warranted, to determine the residential units covered and to adjust the allowable limit on rental increase per annum, taking into consideration, among others, the National Statistics Office census on rental units, prevailing rental rates, the monthly inflation rate on rentals, and the rental price index.

The law also mandates that the rent of any residential unit of up to P10,000 per month in the National Capital Region and other highly urbanized cities, or up to P5,000 in all other areas, shall not be increased by more than 7% annually as long as the unit is occupied by the same lessee.

In 2013, the HUDC Council approved a resolution which extended the period of regulation for the Rent Control Act coverage at status quo rates until Dec. 31, “in light of the required validation and additional data for a more comprehensive recommendation such as the Wholesale Price Index for Construction Materials, Real Estate Price Index and Depreciation Costs, among others.”

HUDCC said the Philippine Statistical Research and Training Institute has concluded a comprehensive study on rental regulation and has submitted its recommendation to the council.

One of its recommendations is to regulate rental increases of residential units below P4,000 at no higher than the rate of inflation. -- Kathryn Mae P. Tubadeza