How foreigners can own a house in the Philippines?

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Americans and other nations, seem to have been fascinated by the Philippines since the Spanish-American War. This archipelago country is technically a collection of over 7,000 islands bordered by Taiwan to the north, the Pacific Ocean to the east, Indonesia and Malaysian Borneo to the south, and the South China Sea to the west. Tourism here increased by 7.7% to 7.1 million visitors in 2018, according to the country's Ministry of Trade and Industry.

The country attracts not only tourists. The Philippines is home to a large and hospitable ex-pat community who enjoy a low cost of living, attractive beaches, beautiful flora and fauna, tropical climate, and friendly locals, just to name a few.

InternationalLiving.com, a publishing group that specializes in retirees abroad, has calculated that most ex-pats can live comfortably in the Philippines for about $1,525 a month, including food, activities, basic health care, and housing. Housing makes up the bulk of the budget. 2 While many ex-pats rent a home, buying a home can be more cost-effective, especially if you plan to stay in the country for more than a few years. Generally, foreigners are prohibited from owning land in the Philippines, but they can legally own a residence. Here are some options.

Key Findings

Foreigners are prohibited from owning land in the Philippines, but they can legally own housing.

The Philippine Condominium Law allows foreigners to own condominiums as long as 60% of the building is owned by Filipinos.

If you're looking to buy a home, consider a long-term lease with a Filipino landowner.

You can also purchase real estate through a corporation, provided that 60% or more of its property is owned by citizens of the Philippines.

Place

One of the main questions when moving abroad is which part of the destination country you will call home. There are many factors to consider before embarking on this hike. Do you want to be close to all the hustle and bustle while living abroad? Or do you really want to leave it all behind and live without the hassle?

If you want to be at the center of it all, think of big cities like Quezon City, which has a population of almost three million. Manila - the capital - with a population of about 1.8 million people - is one of the most densely populated cities in the world. Finally, the city of Davao, with a population of 1.6 million, is one of the country's tourist centers. 4 These cities, like other major metropolitan areas, have everything you would expect including restaurants, nightlife, and entertainment right at your fingertips. There are also many markets as well as access to medical facilities. But remember, with all these amenities come big traffic and big crowds.

Perhaps you are bored with city life and would rather try something less urban. Tagaytay is a popular destination for tourists, both local and foreign. Situated in a mountainous area, it is known as one of the country's summer capitals due to its cooler climate. With a total population of around 71,000, there is plenty to do from golf courses to other outdoor activities. Dumaguete, on the other hand, is slightly larger, with a population of over 113,000. This is the main seaport with beautiful beaches.

To buy an apartment

Perhaps the easiest option is to buy a condominium, a hybrid property that goes beyond traditional structures. With traditional ownership, you own the structure as well as the land it sits on. However, if you buy an apartment, you only own the apartment itself, not the land underneath. The Philippine Condominium Law specifies that foreigners can own apartments in condominiums if 60% of the apartments in the building are owned by Filipinos.

Remember, there are things you need to consider if you are considering buying an apartment in the Philippines. As elsewhere, you will have to pay rent every month. And depending on where you live, you may have to share amenities like the pool, gardens, and shared outdoor areas.

The best thing you can do is not sweat it. Conduct an on-site inspection and a complete inspection of the property prior to purchase. After all, you don't want any surprises when you make a big move.

To buy a house

As we have already mentioned, foreigners can legally own houses and other types of buildings, but they are prohibited from owning the land on which they are located. To get around this, you can buy a detached house but rent the property.

Foreigners can own a house, but not the land on which it is located.

Under the Philippine Investor Lease Act, a foreign national may enter into a long-term lease with a Filipino landowner for an initial period of up to 50 years, renewable once for 25 years.

Of course, the purchase price will depend on where you buy from. The closer you are to a major city, the higher the price. The median price per square foot downtown is around $207.50 nationwide, making a 1,200-square-foot home $249,000. 7 If you choose to live out of town, that's about $119 per square foot, meaning a house of the same size costs just under $143,300. The average interest rate on a 20-year fixed-rate mortgage is about 7.1% nationwide.

Before buying, consider hiring a local agent who deals exclusively with ex-pats. This person can guide you through the entire process and help you avoid costly mistakes. You will naturally have to pay for the service, but it may be worth the investment.

Marry a native

If you are married to a Filipino citizen, you can purchase property in your spouse's name. Although your name will not appear on the title deed, it may be included in the property purchase agreement. If you are separated or your spouse has passed away, the land cannot be transferred to you as you are still prohibited from owning the land, but you will have a reasonable amount of time to sell the property and collect the proceeds. Otherwise, the property will pass to the heirs and/or relatives of your spouse.

Buy through the company

Corporations may own land in the Philippines provided that Filipino citizens own 60% or more of the company and the rest may be owned by a foreign partner or partners. Corporations that meet this requirement must be registered with the Government Board of Investment (BOI) in order to be authorized 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, whether jointly with your Filipino spouse or through a corporation, is 1,000 square meters of urban land—just under a quarter of an acre—or one hectare, or about 2.5 acres, of rural land.

Operating costs

Real estate transactions are always connected not only with the price. If you buy property in the Philippines, you may be expected to pay several fees, including:

Capital gains tax: 6% on the sale price of the residence, district value, or fair market value, whichever is higher. It is usually paid by the seller, but in some cases, it is paid by the buyer or included in the sale price.

Stamp duty on documents: 1.5% of the sale price, zone value, or fair market value, whichever is higher.

Transfer Tax: 0.5% to 0.75% of the sale price, district value, or fair market value, whichever is higher, depending on where the property is located. 12

Title Registration Fee: Varies according to the published table of registration fees; usually about 0.25% of the selling price.

Security

One of the most important things you will have to consider in the Philippines, or anywhere overseas for that matter, is your safety. As of August 2021, the US Department of State has issued a Level 3 Travel Alert for the Philippines due to COVID-19, as well as crime, terrorism, civil unrest, and kidnappings.

As of August 2021, the State Department issued a travel advisory urging people not to travel to the Sulu Archipelago and the Sulu Sea due to terrorism and kidnappings, and another advising not to travel to Marawi city in Mindanao as the federal government has imposed martial law against rebel groups. A third warning was issued for travelers to other areas in Mindanao due to crime, terrorism, civil unrest, and kidnappings.

As of August 2021, the State Department issued a travel advisory urging people not to travel to the Sulu Archipelago and the Sulu Sea due to terrorism and kidnappings, and another advising not to travel to Marawi city in Mindanao as the federal government has imposed martial law against rebel groups. A third warning was issued for travelers to other areas in Mindanao due to crime, terrorism, civil unrest, and kidnappings.

Essence

As elsewhere in the world, real estate prices in the Philippines vary greatly depending on location, size, condition, and features. In most cases, though, you can expect to get a lot more for your money at home than at home: think of a brand new beachfront apartment for under $100,000, for example.

Once you've chosen the general area you'd like to settle in, it can be helpful to work with an experienced real estate agent who can show you different properties, help narrow down your choices, and provide general guidance throughout the process. Your agent can also help you understand the rules of property ownership and what you can and cannot buy as a foreigner.

When buying a home abroad, conduct the transaction in a way that protects your property rights. In the US, homebuyers get title to real estate, but the distinction may not be as clear-cut in every country, or even in every corner of the country. To ensure that everything goes as smoothly as possible and to protect your rights, consult with an experienced real estate specialist and lawyer.

Still, have questions? Feel free to ask

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