Can You Buy Property In The Philippines

The short answer is yes, but there are a lot of things/events to consider before diving into the venture of property ownership. In this post, I break down some of those hidden things that you must consider before taking the leap into buying property in the Philippines.

When someone ask me “can I buy property in the Philippines” with an odd gaze in their eyes and I say yes, there’s this mystery and a flurry of ubiquity questions about how is it done.

Often touted as a tropical paradise, it is not surprising that the Philippines attracts interest from many foreign nationals who want to settle either permanently or semi-permanently in the country. It also helps that the country’s economy is one of Asia’s strongest with more and more foreign businesses choosing the Philippines as one of their key target areas.

Although the constitution does not allow foreign nationals to own land in the Philippines, there are a few legal exceptions. For instance, they may own a condominium unit so long as foreign ownership in a single condo project does not exceed 40 percent. They may also lease a residential lot for 25 years which can be extended for another 25 years – As of this writing, some will say that the lease agreement is 50 years and some say it is 25 years – and build a house on it. Furthermore, they may also form a corporation with Filipino partners – again foreign ownership in said corporation must not exceed 40 percent – whereupon the corporation can legally purchase and own land in the Philippines.

Besides the cost of the house or condo, some of the other cost that are associated with home ownership in the Philippines are:

Buying from a private party:

  • Capital Gains Tax – 6% of actual sale price. This is paid by the seller but in some cases, the buyer might be expected to be the one to pay. This percentage could differ if the property assessed is being used by a business or is a title owned by a corporation, in this case, the percentage is 7.5%.
  • Document Stamp Tax – 1.5% of the actual sale price. This is paid by either the buyer or the seller upon agreement. Normally, however, it is the buyer who shoulders the cost.
  • Transfer Tax – 0.5% of the actual sale price
  • Registration Fee – 0.25% of the actual sale price

Buying from a developer:

  • Capital Gains Tax – 10% of actual sale price. This value might be expressed as part of the sale price.
  • Document Stamp Tax – 1.5% of the actual sale price
  • Transfer Tax – 0.5% of the actual sale price
  • Registration Fee – 0.25% of the actual sale price

Some tips when searching for a home to buy:

  • Research Expat-populated areas
    If you are looking for a property to call home, it might be a good idea to purchase one in an expat-populated area, such as Metro Manila which include the cities of Makati, Parañaque, Quezon, and Taguig or Angeles City in Pampanga, or Subic Freeport Zone.There are several reasons why these areas are considered expat-friendly, and have amassed a considerable number of foreign national residents over the years. These reasons include the convenience of their location, secured communities and villages, family-friendly establishments and institutions, and proximity to transportation hubs. Angeles City and Subic were former U.S. military installations that have retained much of their American suburban ambiance.
  • Check Properties Online
    To help you with your initial research, you may wish to check out online property listing platforms, where you can view thousands of properties for sale or for rent available in the Philippines. These listing platforms can show you the properties’ details, such as high-quality images, location, and price, as well as the seller’s or broker’s information. They even have search filters that allow you to customize your property search according to your preference, and are designed to allow you to compare properties simultaneously. They also have loan calculators to help you determine how much financing you would need per property.
  • Work with a Licensed Real Estate Broker
    It is important to work with a licensed real estate broker to help you find your perfect home in the Philippines. Find a broker who has a track record in successfully closing transactions and one who has strong emphasis on professionalism. A licensed broker is also an area or location expert who has plenty of connections and knows more about your desired area. Hence, he or she can show you plenty of properties that might suit your needs, taste, and budget. Moreover, a seasoned real estate agent can get you a great deal for your desired property.
  • Do Not Rush into Things
    Just because you have fallen in love with a property at first sight does not mean it is always wise to purchase it right away. Carefully evaluate the property first. Check its condition, the neighborhood it is in, and perhaps the distance from key points of interest. It is also worth checking out the neighboring areas where better options might be located.
  • Take Note of the Transaction Fees and Taxes
    Aside from shelling out money to pay for the property, keep in mind that there are other fees and taxes – as noted above – that need to be paid, such as Documentary Stamps Tax, Transfer Tax, Registration Fee, Notarial Fees, and Loan Fees. Taking these into consideration will let you know if your budget is still in check before signing the Contract of Sale.
  • Be Aware of the Rules
    Normally subdivisions and condominiums have a set of rules and regulations that must be followed in order to maintain a clean, orderly, and peaceful community. It is better to know these rules beforehand to see if you are comfortable conforming to all of them, or if you need to find another property should there be any rule that you do not agree with.
  • Consider the After-sales Dues
    If you decide to purchase a condo, keep in mind that there are monthly fees that you need to settle. Commonly known as condo dues, the computation of which is based on the size of your unit. For example, for a 150 sqm unit in a condo that charges homeowners p75/sqm, the monthly condo dues would be p11,250. It is important to settle this every month as the money collected is used for the common areas’ upkeep and wages of security personnel, among many other property related expenses.
  • Check if the Seller Is the True Owner of the Property
    Note. I have read about a ton of different scams and in some cases, an investment gone wrong resulting in the investors death.You will want to carefully verify if the seller is the true owner of the property by asking for the original copy of the title and compare it against any valid – ideally government issued -IDs presented. You may also seek the assistance of a licensed broker to verify the authenticity of said title in the local Registry of Deeds or the Land Registration Authority.
  • Check that the Title Is Clean
    This is a very important to check the title for annotations, which documents that there is a certain claim to the property by another party. An example would be a bank or loan provider who writes entries – or annotates – in the land title to signify that the property is mortgaged although ownership still resides with the owner. As a diligent property buyer, it is important to check titles for these annotations to ensure that the said property is free of encumbrances.
  • Consult an Attorney
    Finally. If something doesn’t feel right, seek the advice of a good, licensed attorney. It could save you a mountain of headache and possibly getting scammed.

Hopefully, I’ve been able to shed some light on the questions that I get ask about buying a home in the Philippines.