Q AND A ON THE EXTENSION OF RENT CONTROL

. WHAT IS THE LEGAL BASIS FOR EXTENDING RENT CONTROL?

Rent Control under Republic Act 9653 was approved on July 14, 2009 and expired on
December 31, 2013. Upon expiration, the law mandated HUDCC to:

1.1 Continue the regulation of the rental of certain residential units, determine the
period of regulation and its subsequent extensions, if warranted, determine the residential
units covered and adjust the allowable limit on rental increases per annum;

1.2 Conduct every three (3) years from the effectivity of the Act, a review of its
implementation and study on rental regulation, and submit its recommendation to Congress
whether to continue regulating or deregulating; and

1.3 Formulate and implement a two-year transition program, which will provide for
safety measures to cushion the impact in the event of a regulation-free rental to housing
market.

2. WHAT DID HUDCC DO WHEN THE LAW EXPIRED ON DECEMBER 31, 2013?

The HUDC Council issued Resolution No. 2 in December 2013 extending the Rent Control for
another two years at status quo rates of not more than 7% per annum for:

2.1 Renters in Metro Manila and highly urbanized areas whose monthly rates are
P10,000 and below; and

2.2 Renters in other areas whose monthly rental rates are P5,000 and below,

As long as the unit is occupied by the same lessee.

The Council’s decision was based on the preliminary study of the Philippine Statistical
Research and Training Institute of the Philippine Statistical Authority, as follows:

2.3 There are about 1.5 million renters nationwide based on the 2012 Family Income and
Expenditure Survey;

2.4 97% of said renters are renting monthly at P10,000 and below.

The status quo was adopted inasmuch as there is a need for further data and validation,
such as the Wholesale Price Index for construction materials, for a comprehensive study.

3. RENT CONTROL WILL AGAIN EXPIRE ON DECEMBER 31, 2015. WHAT HAS HUDCC
DONE ABOUT THIS?

The HUDC Council issued Resolution No. 1 in June 2015 which extended Rent Control for a
period of another two (2) years - from 01 January 2016 to 31 December 2017.
 4. WHAT UNITS ARE COVERED BY THE RENT CONTROL EXTENSION?

4.1 Scope of Coverage. The Rent Control covers the following residential units
nationwide, whose monthly rent is P10,000 and below:

A. Apartments;

B. Houses and/or land on which another’s dwelling is located and used for residential
purposes; and

C. Buildings or parts thereof, which are being used solely as dwelling units, boarding
houses, dormitories, rooms and bed spaces.

4.2 Exclusion. As provided in RA 9653, rented units, which are used as motels, motel
rooms, hotels, and hotel rooms including those used for home industries, retail stores or
other business purposes if the owner thereof and his or her family actually live therein and
use it principally for dwelling purposes are not covered by the Act.

5. WHAT ARE THE NEW RATES OF INCREASE UNDER RENT CONTROL?

The increase in the monthly rental rate of any residential unit shall not be more than:

5.1 Four percent (4%) annually for those paying a monthly rent/ranging from P1.00 to
P3,999.00; and

5.2 Seven percent (7%) for those paying a monthly rent of P4,000.00 up to P10,000.00
for as long as the unit is occupied by the same lessee.

The respective Housing and Urban Development Committees of both Houses of Congress
have approved/confirmed the above recommendations.

6. WHY ARE THERE TWO TIERS NOW COMPARED TO RA 9653?

Provide lower rates of increase to low income renters. The subsequent study done by the
Philippine Statistical Research and Training Institute looked at the census on rental units,
prevailing rental rates, monthly inflation rate on rentals of the immediately preceding year,
and rental price index.

The study showed that out of the 1.5 million renters in the country, 1.27 million (82%) are
renting at less than P4,000 monthly.

With regard to the rate of increase, the study recommended to adopt the inflation rate on
rentals of the immediately preceding year, which at 2014 was at 4.1%.

Since Rent Control is intended to assist the low income families who are renting, it was
decided to lower the rate of increase to 4% for those renting below P4,000 a month.
But should not disenfranchise those already covered. Since the existing Rent Control covers
those who are renting up to P10,000, the Council resolved to continue covering them at the
existing rate of 7% as provided in RA 9653.

7. WHAT ARE THE OTHER PROVISIONS OF RA 9653 THAT REMAIN EFFECTIVE?

7.1 REQUIRED ADVANCE RENT AND DEPOSIT

Every lessor is allowed to impose not more than one (1) month advance rent and not
more than two (2) months deposit, which shall be deposited in a bank under the lessor’s
account name during the entire duration of the lease agreement. Any interest that shall
accrue therein shall be returned to the lessee at the expiration of the lease contract.

7.2 FORFEITURE OF DEPOSITS

The lessor has the right to forfeit a portion or all of the one month deposit including
the interest earned in the event the lessee is unable to settle rent, electric, telephone, water
or such other utility bills or destroys any house components and accessories.

7.3 GROUNDS FOR JUDICIAL EJECTMENT

The lessor has the right to eject the lessee on the following grounds:

A. The lessee assigns the lease or sub-leases the unit, without the written consent of the
owner/lessor;

B. The renter has accumulated arrears in rental equivalent to three (3) months;

C. After the expiration of the lease period, the lessor/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;

D. The lessor/owner needs to make necessary repairs on the leased premises which is the
subject of an existing order of condemnation by appropriate authorities concerned in order
to make the premises safe and habitable; and

E. The lease contract has expired. The lessee cannot be ejected on the ground that the
leased premises have been sold or mortgaged to a third person regardless of whether the
lease or mortgage is registered or not.

7.4 PENALTIES FOR VIOLATION OF ANY PROVISIONS OF THE RENT CONTROL ACT

Any person found guilty of violating any provision of the act shall be fined of not less Twenty
Five Thousand Pesos (P25,000) nor more than Fifty Thousand Pesos (P50,000) or
imprisonment of not less than one (1) month and one (1) day to not more than six (6)
months, or both.
 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 of 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.