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The Philippines, an archipelago with thousands of islands and islets, attracts visitors from around the world. The country attracts more than just tourists, however. The Philippines is easily among the top choices of expats who want to enjoy a low cost of living, inviting beaches, beautiful flora and fauna, tropical climate, laidback life, and friendly locals.
If you have decided to move to the Philippines, housing makes up a large percentage of the budget - just like anywhere in the world. For the most part, as a foreigner, you cannot own land, so that the eternal question among expats is whether to buy or rent a house/apartment in the Philippines.
Read on to find out everything you need to know if you want to buy or rent a property in the Philippines.
Renting a House or Apartment
Properties in the Philippines range from single-family homes to modern homes to condominium units. The rental prices in the country are usually based on the area of the property, measured in square meters. It is not uncommon for the deposit to be equal to three months' rent, and most importantly, you may need to pay the rent in advance.
Rent is usually paid monthly or quarterly. If you choose to use an agent or broker to find rent, you must pay them a commission, which is usually equivalent to one month's rent (negotiation required).
Depending on who you are talking to, the definition of furnished and unfurnished is slightly different, so it’s best to check with the landlord before signing anything, such as the exact contents of the apartment, including furniture and fixtures.
Finding a real estate or rental property
The key to finding the right rental property for you is determining what you want. Consider the local amenities, transportation, schools, open spaces, and proximity to work. Create a list of your needs and preferences, what you like and dislike in a home, to make your search as efficient as possible.
A good platform for finding rental properties is on the Internet. Here, you will find listings of expensive real estate or luxury properties, as well as affordable houses or apartments for rent. Some of the popular online portals include Lamudi, ZipMatch, Rentpad, and MyProperty.
Best it will be, however, if one looks for it locally. Once you’ve determined your target location, go or drive around the area to see where you like it and where you feel comfortable. You can also chat with other expats in the Philippines and get some advice from them.
Rental costs
For 104 USD per month, you can already rent a small house in the province or an apartment. But then you can't expect a European standard.
Apartments and condominiums in bigger cities like Manila or Cebu are typically available for about 207 USD. But if you are looking for a better standard, you have to calculate with costs starting from 414 USD and expect to pay more if you prefer properties in good areas in a big city.
A house in a nice location can be bought for about 207 to 414 USD per month. But even in nice areas, there are houses for 207 USD per month. If you want a house with a good standard, in many areas you can get it for 311 to 518 USD.
The Standards
Real estates in the country do not always necessarily have our usual standards, but mostly there are real estates in the price ranges specified above, which meet our requirements.
Tip: With a relatively small amount of money, one can eliminate deficiencies and make the property more suitable for your needs and preferences. Possibly negotiate a rent reduction in return for the improvement.
If you rent a house and then renovate it at your own expense, e.g. install a new bathroom or kitchen, you should try to arrange with the landlord that the renovation costs are added to the rent. But attention: it has already happened that the landlord has increased the rent soon because the house is now worth more. Thus, make sure that the agreement you made with the landlord is clear and well-documented to avoid bad surprises.
Buy a house or apartment
While many foreigners adhere to leasing, it can be more profitable to buy, especially if you are planning to stay in the country for more than a few years (or perhaps want to get a second home there).
In general, foreigners cannot own land in the Philippines. However, they can legally own a residence, and some of the options include the following.
- Buy a house
As mentioned, foreigners can legally own houses (and other types of buildings), but they cannot own the land on which it sits. As a workaround, you can buy a separate house but lease the property.
Under the Philippine Investor Lease Act, a foreigner can enter into a lease with a Filipino owner for a long-term lease with an initial period of up to 50 years. This also comes with a one-time option to renew for 25 years.
- Buying a condo
Probably the easiest option for expats wanting to own real estate in the country is to purchase a condominium unit, which is a hybrid type of property between a house and an apartment, and falls outside of conventional structures. With traditional land ownership, the buyer is the owner of the structure, in addition to the land on which it sits.
If you buy a condo, however, you only own the apartment unit itself - not the land beneath it. The Philippines Apartment Law specifies that foreigners can own condo units as long as 60% of the units in the building are owned by Filipinos.
- Marry a Filipina/Filipino
If you are married to a Filipino citizen, you can buy a property in your spouse's name. Although your name will not be on the title, it may be included in the contract to purchase the property.
If you are legally independent, or your spouse dies, the land cannot be transferred to you (as foreigners cannot yet own the land), but you will have a reasonable amount of time to sell the property and collect the proceeds. Otherwise, the property will be passed on to the heirs and/or relatives of your spouse.
- Buy through a Company
Corporations can own land in the Philippines, on the condition that Filipino citizens own 60% or more of the company. With that said, the remainder may be owned by a foreign partner or partners.
Companies that meet this equity participation requirement must be registered with the Governing Board of Investments (BOI) for permission to buy, sell or act as an intermediary in a real estate transaction.
As a foreigner, the largest piece of residential land you can own - either with your Filipino partner or through a partnership - is 1,000 square meters of urban land (just under a quarter of an acre), or one hectare of rural land, which is around 2.5 acres.
Transaction fees
As is usually the case, real estate transactions involve more than just the price tag. If you buy a property in the Philippines, you may expect to pay various fees.
Among the fees include the Estate Tax - 6% of the sale price of the residence, the zonal, or fair market value, whichever is higher. Normally, this is paid for by the seller. In some cases, though, the buyer pays for it, or the fee is already included at the sale price.
Stamp Documentary - 1.5% of the sale price, zone value, or fair market value, whichever is higher.
Transfer Taxes - 0.5% to 0.75% of the sale price, zone value or fair market value, whichever is higher.
Title Registration fee - Generally around 0.25% of the actual sale price, but may vary depending on which is higher - the selling price, or zonal value, or fair market value.
Finding the Right Balance
Like anywhere in the world, property prices vary widely in the Philippines, depending on location, size, condition, and features.
In most cases, however, particularly if you know how to look, you can expect to get a lot more "home" for your money than you would go home to: Think new beachfront condo, for example, for less than $ 100,000.
Once you choose the general area in which you want to place down, it can be helpful to work with an experienced real estate agent who can showcase various properties, help narrow down your options, and provide general guidance throughout the process. Your agent can also help you understand the rules regarding the property.
As a general rule, when buying a home abroad, the transaction must be carried out in a way that protects your property rights. To help ensure that everything goes as smoothly as possible, and to protect your rights, it is recommended that you consult with an experienced real estate professional and attorney.