Law Summary
Declaration of Policy
- The State commits to programs encouraging affordable housing development for lower-income and other beneficiaries.
- Protection of housing tenants from unreasonable rent increases is emphasized.
Definitions
- Rent: Payment for use or occupancy of residential units, paid monthly or otherwise.
- Residential Unit: Includes apartments, houses, land with dwellings used principally for residential purposes.
- Excludes motels and hotels.
- May include units used for home industries or shops if owner and family reside there.
- Immediate Family Members: Spouse, direct ascendants, or descendants by consanguinity or affinity relevant for repossession.
- Lessee: Person renting the unit.
- Owner/Lessor: Owner or authorized administrator/agent.
- Sublessor: Leases unit from owner and rents it out.
- Sublessee: Rents from a sublessor.
Limit on Rent Increases
- No rent increase for one year from the Act's effectivity.
- After one year until December 31, 2013, maximum 7% annual increase allowed if occupied by the same lessee.
- New rent set by lessor upon unit vacancy.
- Boarding houses/dormitories reserved for students may only increase rents once annually.
Coverage
- Residential units in National Capital Region and highly urbanized cities with monthly rents from P1.00 to P10,000.00.
- In other areas, units with monthly rents from P1.00 to P5,000.00.
- Existing contracts are not affected.
Authority to Continue Rental Regulation
- HUDCC authorized to regulate rent beyond the initial four-year period.
- HUDCC may determine covered units, limit adjustments in allowable rent increases.
- Adjustments to consider government statistics and economic indicators.
Payment of Rent and Deposit Requirements
- Rent is payable in advance within the first 5 days of the current month or as contract specifies.
- Lessor may not demand more than one month advance rent.
- Security deposit capped at two months’ rent, deposited in a bank under lessor's name.
- Interest from deposit must be refunded to lessee at lease expiration.
- Forfeiture of deposit allowed for unpaid bills or damage by lessee.
Restrictions on Assignment and Subleasing
- Assignment or subleasing without written consent of owner/lessor is prohibited.
Grounds for Judicial Ejectment
- Unauthorized assignment or sublease including boarders/bedspacers.
- Rent arrears of three months or more, with provisions for consignation upon refusal of lessor to accept rent.
- Legitimate owner need for repossession for self or immediate family, with prior notice and prohibition on leasing to third parties for one year.
- Repairs in cases of condemnation; lessee has first preference post-repair.
- Lease contract expiration.
Ejectment Prohibition Based on Sale or Mortgage
- Sale or mortgage of leased premises cannot justify ejectment of lessee.
Rent-to-Own Agreements
- Lessors may enter written rent-to-own contracts transferring ownership to lessee.
- Rent-to-own agreements exempt from rent control coverage.
Applicability of Civil Code and Rules of Court
- Suspension of certain Civil Code provisions if conflicting with this Act.
- Other lease contract provisions still apply if not in conflict.
Penalties
- Violations subject to a fine between P25,000 and P50,000 or imprisonment from one month and one day to six months, or both.
Information Drive
- DILG and HUDCC shall conduct continuous information campaigns.
- Information to be translated into major dialects and posted in public places.
Review of Rental Regulation
- HUDCC mandated to review the law's implementation every three years and recommend continuation or deregulation.
Transition Program for Deregulation
- A two-year transition program to cushion the impact of deregulation must be formulated and implemented.
Separability Clause
- Invalidity of any provision does not affect the remainder of the Act.
Repealing Clause
- Laws and orders conflicting with this Act are repealed or modified accordingly.
Effectivity
- The Act takes effect 15 days after publication in two newspapers of general circulation.