The economy of the Philippines has been on the rise for over a decade and is expected to continue well into the future. Now is the perfect time to buy real estate in the Philippines as property values are expected to get higher. Now is also the perfect time to be a landlord. Rental yields are soaring, especially for medium sized properties. Over sixty percent of the population in the Philippines rents their place of residence. Because of the high rental demand, owners are all but guaranteed a good return on investment.
The rental demand in the Philippines is driven by the need for availability and affordability. In spite of real estate developers launching many housing projects, there is still a backlog approximating 58,000 units per year. Also, as land is becoming scarcer especially in Metro Manila, house and lots for sale are becoming pricier. These however, are drawbacks that can be overcome by renting. One can have the advantages of living in a house without fully committing to it – financially and otherwise.
Economic growth, flexible credit costs, and cost-effective rates have bolstered the rental market in the Philippines. Makati remains as a top destination where monthly rates as of 2015 go from PHP 200,000 to PHP 600,000 for a three to four bedroom home in the executive villages of Forbes Park, Dasmariñas Village, and Urdaneta Village. Other popular gated communities, such as Bel-Air Village, Magallanes Village, and San Lorenzo Village range from PHP 90,000 to PHP 300,000. Similarly, monthly rates in Taguig go from PHP 105,000 to PHP 285,000 for houses around 120 to 300 square meters. In Muntinlupa, homes in Ayala Alabang Village cost from PHP 75,000 to PHP 250,000 per month. Of course, there are more affordable options to rent a house in apart from these top spots.
Although the monthly rent will be your highest expenditure per month, there are other costs that must be taken note of, especially if you are renting a house for the first time. Do not expect to simply move in and start paying on a monthly basis. The following are typical up-front one-off costs that occur before you can move in your future home. Note however, that these may still vary depending on your tenancy contract or if you are negotiating with a real estate agent or directly with the homeowner.
For those who are going through a real estate agent, you may be asked to pay a holding fee for the property you are interested in. This secures your reservation of the house that it will already be taken off the market, and no other offers are considered. This is not an extra fee, but is considered as part of your total move-in costs. However, if you decide otherwise on the property after paying this fee, you will not be able to get it back.
Usually, the landlord will require you to pay a month’s rent in advance. This could also be more, especially if you are unable to sufficiently prove that your income can support the monthly cost of the property.
This is the homeowner’s insurance in case of any damages to the property or missed monthly payments. The amount depends on what is agreed upon in your contract, but it is usually equal to four to eight weeks of rent. You should get this amount back after your tenancy.
If you found your house through an agency, you may be charged with an agency fee. This is usually not only for finding you the property, but also for other services, such as checking credit and reference checks, drawing up the lease agreement, handling the turnover of the house including professional cleaning, and basic administration.
If your house is located inside a village or gated community, you may need to pay village association fees. This is for the use and maintenance of the facilities, such as the clubhouse, swimming pool, playground, and park. The village sticker for your vehicles may be a separate cost.
It can be challenging to buy a house, as land is not a renewable resource and an increasing population that further increases the demand for real estate subsequently leads to a continued rise in most land values. This is why for some people, renting becomes their only option. Fortunately in the Philippines, there are what you call “rent to own” houses.
By opting for a “rent to own” house, you as a home seeker can be invested in a property that you and your family can own for generations to come, even if you presently do not have the finances to afford a down payment. While the monthly payment you make (paid as your rent) may be more than the standard rental rate, you are at least better ensured of being able to own the home you are occupying.