Cebu Real Estate Guide

Primer on PH Rental Law (RA 9653)

Whether you’re a landlord or a tenant, learning about the Rent Control Act of 2009 should be imperative for you, especially in cases of conflict. Basically, this law covers housing rentals across the country and protects around 1.5 million renters nationwide from a sudden increase in rental rates.

RA 9653 or the “An Act Establishing Reforms in the Regulation of Rent of Certain Residential Units, Providing the Mechanisms Therefore and For Other Purposes” was approved in 2009. It expired on December 31, 2013, but was since been repeatedly extended by the Housing and Urban Development Coordinating Council (HUDCC), the government agency tasked to oversee the law’s implementation. Its latest extension was from January 1, 2018, until December 31, 2020.

To simplify the provisions of the Rent Control Act os 2009, we rounded up the salient points that you have to know about:

The law only applies to houses with rental rates Php10,000 and below

The Rent Control Law or RA 9653 provides these conditions for residential units in various locations:

(a) in Metro Manila with monthly rent between one peso (P1.00) and ten thousand pesos (P10,000) per month; and

(b) in other highly urbanized cities in the country, with monthly rent between one peso (P1.00) and five thousand pesos (P5,000).

Rent refers to the rental rate alone, exclusive of utility charges that may be charged to the renter. The coverage isn’t limited to “house and lots.” The law also residential units as:

  1. Apartments;
  2. Houses and/or land on which another’s dwelling is located and used for residential purposes; and
  3. Buildings or parts thereof, which are being used solely as dwelling units, boarding houses, dormitories, rooms, and bed spaces.

Condo units fall under number 3 above, which means they are covered by the Rent Control Law as long as the monthly rent is P10,000 and below.

Housing units with monthly rates above Php10,000 are not covered

As the Rent Control Act of 2009 exempt these units from coverage, it means an increase in rental rates will be allowed by law provided that it is mutually agreed on by tenant and landlord. Both parties can freely negotiate and agree on the rate and frequency of increase. 

Rent-to-own units, commercial spaces, motels, and hotels are exempted

RA 9653 does not cover these purposes. In commercial spaces, which include those used for home industries, retail stores, or other business purposes, living in the unit is also not covered by the law.

Rent-to-own units are governed by separate binding contracts, and therefore, do not fall under the Rent Control Act.

It is illegal to demand “One Month Advance, Two Months Deposit”

Aside from this, the law also requires landlords to deposit the amount of the two-month deposit in a bank under the lessor’s name, with all accrued and accumulated interest to be returned to the tenant, along with the deposit at the expiration of the rental contract.

Rent Control Act allows the sum total of these to be used to pay any remaining obligations of the lessee, i.e. unpaid utility bills, repair of damages, and replacement of any component of the rented unit.

The maximum rent increase for rental units below Php5,000 is 2 percent

Residential units charging monthly rent of up to P4,999.00 cannot increase the rental price by more than two percent (2%) per year, as stipulated in the Rent Control Act.

The maximum rent increase for rental units from Php 5,000 to Php 8,999 is 7 percent

Housing units charging monthly rent of P5,000 to P8,999, meanwhile, are not allowed to increase rates by more than seven percent (7%) per year, if the unit is occupied by the same tenant.

The maximum rent increase for rental units from Php 9,000 to Php 10,000 is 11 percent

According to the provisions of the Rent Control Act, houses for rent charging monthly rent of P9,000 up to P10,000 are not allowed to increase rates by more than eleven percent (11%) per year, if the unit is occupied by the same tenant.

Boarding house or bed space for students can only increase rent once a year

Rental accommodations offered to students such as boarding houses, dormitories, rooms, and bed spaces are only allowed to increase rents once a year, even if a new renter occupies the unit within the same year.

Valid grounds for evicting tenants

The law also has provisions for landlords and unit owners, especially when it comes to legally terminating the lease contract and ejecting the tenant.

  1. The tenant sub-leases the unit (that is, offers the unit for rent to other renters) without the explicit written permission or consent of the owner;
  2. The renter has three (3) months worth of unpaid rent;
  3. After the expiration of the rent contract, the owner has a legitimate need to repossess the property for his/her own use or that of his/her family as a residential unit, provided that the renter was notified three months in advance;
  4. The unit owner needs to make necessary repairs on the unit, which is the subject of an existing order of condemnation by appropriate authorities, in order to repair the property and to make it safe and habitable; and
  5. The lease contract has expired.

Penalty for violators of the Rent Control Act

According to the law, violators of the Rent Control Act face a fine of not less than P25,000 but not more than P50,000, or imprisonment of one (1) month and one (1) day up to six (6) months, or both. These are decent penalties butt we hope the law can have more teeth in running after unscrupulous landlords who exploit their tenants.

Effective implementation of the law and information dissemination can benefit millions of Filipino renters of houses, apartments, and condominium units. The law can also help in settling issues and avoid further escalation, leading to unforeseen legal implications.

Source: Pinoy Money Talk

Leave a Reply

Your email address will not be published. Required fields are marked *

error: Content is protected !!