The Rent Control Act of 2009, or Republic Act 9653, was created for the sole purpose of protecting both landlord and tenant from conflicts when it comes to properties for rent. The law, which has since been extended until December 31, 2017, has since limited the increase of rental payments for residential units in the Philippines. It also has provided limitations regarding advances and deposits, and grounds a landlord or owner is allowed to evict a tenant.
Here’s a guide to understand the effects of the Rent Control Act of 2009 before renting a property in the Philippines:
RENTAL PAYMENT INCREASE
Under the law, the annual increase should not be over 7% of the actual rent. However, this is only applicable to long-term tenants. Moreover, rental rates on properties that are leased out to students should only be increased once a year.
Landlords/owners still have the right to increase the rent for the new tenant once the unit for lease has been vacated by the original tenant.
ADVANCES AND DEPOSITS
Landlords or owners are not allowed to demand more than one (1) month advance rent and more than two (2) months deposit, according to the law. At the end of the rental agreement, landlords or owners are required to return any accumulated interest of the tenant’s deposit, unless the latter has failed to settle outstanding utility bills or if there was legitimate damage done to the property by the tenant.
TENANT EVICTION GROUNDS
To address the conflict arising immediate eviction, Rent Control Act of 2009 has established reasons and remedies a landlord or owner is allowed to evict a tenant:
- Lease or contract expiration.
- Non-payment of rent for a total of three (3) months.
- If payment is not accepted by the landlord or owner, tenant can deposit the rental payment by depositing it directly on the former’s bank account, by way of consignment to the barangay chairman, city treasurer or the appropriate court within one month of refusal. The tenant should also make rental deposits every ten days of the current month after the payment.
- Legitimate use by owner or landlord or immediate family members, under certain conditions:
- Rent has already expired;
- Owner/landlord has advised the tenant three months in advance; or
- Property rental in question will not be leased to another tenant for at least a year.
- Property has been seized by the government or proper authorities due to the property’s physical state and the owner/landlord has to do repairs to make the place safe and livable, provided that:
- Tenant should be given the option to lease back the unit after repairs.
- Rent increase should be “reasonably appropriate” to the costs incurred in the repairs.
- Tenant renting privileges forfeited if the property is to be demolished instead.
If the property for rent was mortgaged or sold to another owner, the new owner would still need to follow the provisions regarding eviction.
PENALTIES
Guilty parties will be fined not less than Php25,000, but not more than Php50,000, or subject to not less than one (1) month and one (1) day but not more than six (6) months imprisonment, or both.
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