Compass Real Estate > Cambodia Investment Guides > Philippines Property Overview

Philippines Property Overview

244
2020-05-30
Summary:The real estate value of the Philippines is the lowest in Asia, the real estate appreciation is stable (about 10% per year), and the rental return rate is as high as 6-10%.

Housing purchase policy

1. The government stipulates that foreigners can buy apartment, but they can only occupy 40% of the entire apartment. Foreigners cannot buy land, but they can buy real estate through a company, provided that the company’s share must be 60% Philippine shareholder.

2. The property rights of the housing in the Philippines are divided into Freehold and Leasehold, while foreigners can have freehold property rights in the Philippines, and there is no restriction on the holding time. 

3. Foreigners can buy apartments only, which are the high-rise residential buildings Condo or Apartment, or office buildings. For House and Lot with land, that is, houses or villas cannot be purchased, and townhouses are also with land, and cannot be purchased, locals have no restrictions

4. The Philippines does not restrict on purchase quantity, but foreigners can only occupy 40% of the entire apartment. Calculate by net area of units, there is no public area.

5. Locals can make loan payments (off-plan housing in first-hand housing), or use loans to buy second-hand housing. The maximum loan period of 90% can even reach 30 years. If a foreigner does not have a work permit or SRRV, he or she cannot afford a loan. Those with work permits can generally borrow up to 70%, with a maximum tenure of 10 years, and the interest rate is the same as that of locals.

6. The vast majority of Philippine real estate developers provided apartment decorated, no matter well decorated or simple decorated. Most apartments are equipped with indoor or outdoor swimming pool, gymnasium, children's activity room, parlor, multi-function hall, sauna shower room. Some apartments even have yoga rooms, pool tables, spas, libraries and other services. Most of the property facilities are provided to the owners for free.

Taxes

purchase

VAT

12%,included in total price

Rename tax

5%-6%

Stamp duty

1.5%

Register fee

1-3% transfer fee,register fee, document fee and etc

hold

Property tax

0.1%~0.3%/year,tax may differ from region

sale

Capital gains tax

6%,calculate by transaction fee

Process of purchase housing.

1. Book. After selecting the room number, you can start the booking process, generally submit relevant information and sign a booking agreement, and pay the deposit.

2. Decide whether to purchase. Within thirty days, it is necessary to decide whether to purchase, sign a contract with the developer, and pay. The payment method can be a one-time full payment; you can also pay part of the down payment, then pay in installments, and pay the final payment when you pay the room.

3. Delivery. This process is all handled by the developer, and all taxes and fees are given to the developer when buying a house. The owner needs to go to the house inspection and get the key. The developer will email the owner a few months in advance to notify the owner when they can go through the house delivery procedures.

4. Property rights management: After the payment is paid, Contract To Sell. After the contract is signed, there is also a Deed Of Sale. Both of them are signed before the real estate certificate is officially processed. The real estate certificate is usually obtained 6-9 months after delivery. House rental and sale are not affected by the property certificate.

Payment

Lump sum payment

One-time payment can be paid in cash, cheques or directly remittances from overseas to developers, but the cost is relatively high.

 

Payment by installment 

The payment in installments varies from 3-5 years and generally requires a small down payment (0-20%). There are three ways to pay the remaining installments:

The first method: you can use your own check in the local bank of the Philippines, fill in different dates and amounts on the check (you can also choose to remit money to the account every month / half year / year), the developer takes the your check to withdraw money from the bank.

The second method: individual banks support monthly automatic deductions. You can sign an agreement with the developer, and the developer will regularly deduct money from your account opening bank.

The third method: Regular remittances from overseas banks to developers.

Loan mortgage payment

In the Philippines, all banks are private banks, and the application process for mortgage lending is relatively conservative and formal. The most important thing about Philippine bank loans is not the project, but the applicant's repayment ability and the bank's creditworthiness.

The proportion of Philippine bank loans can reach 70%, and the fee rate is about 5% to 7% (depending on the length of the bank and loan). At the same time, 2% -4% of the loan amount will be charged as a service fee. It takes about 1-2 months to process.

Application information (varies from banks):

1. ID card, passport

2. Purchase contract, deposit and down payment receipt

3. Bank Statement in the last 3-6 months

4. Credit report of the applicant

5. Other document needed for loans.

Apply process

Loan application- pre-approval- inform customers to prepare supplementary materials-loan approved-transfer

Other considerations

Requirements for opening a bank account: provide 2 of the following valid documents and visas: Passport, ACR-I card / ICR, AEP SRRV, SIRV, driver ’s license, TIN card, industrial zone or special zone issued card.

Transfer of housing rights

After the payment is made, the contract is signed, Contract To Sell. After the contract is signed, there is also a Deed Of Sale. Both of them are signed before the real estate certificate is officially processed. In the Philippines, there is a difference of about 90 working days before your house are delivery. The housing certificate is usually obtained 6-9 months after delivery. Housing rental and sale are not affected by the housing certificate.

Housing trust

In 2018, the average price increase in Manila's core areas was about 30%. The current price is around 30,000 RMB. It is expected that there will be at least a two-year period of rapid rise. (According to the law of international real estate development. A last week's cycle is about 15-20 years, of which the first 5 years are rapid development periods, and the latter 10-15 years are stable upward ranges).

In 2018, the rental-sales ratio in the core area of Manila was about 8% -10%rental growth and economy & population closely related, as the economy and population continue to improve, rent growth will continue to rise.

Most apartment developments in the Philippines provide chartered custody, usually directly leased by the developer. The leasing party is mostly a hotel that is settled in, and the hotel agrees to take care of it. The lease period is mostly 3 to 5 years, and some developers also provide repurchase policies after the expiration.

In addition, large developers also have their own rental offices. Many intermediaries or platforms have some agency or rental agency services that can be entrusted to help them.


Disclaimer: The re-forward articles on Compass website are for the purpose of conveying more information, and it does not mean that the Compass website agrees with its views or confirms the authenticity of its content. Article noted as "Source: Compass original", please note that the source from Compass. The content of the article is for reference only and should not consider as investment advice, and it does not mean that Compass agree with its views.

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