Incentives for Rental Residential Housing by the Private Sector Act

fier of the TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES ) AUG -5 P4:02 First Regular Session SENATE RECEI D BY S. No._ Introduced by Senator Jinggoy Ejercito Estrada AN ACT TO PROVIDE INCENTIVES FOR THE PRIVATE SECTOR TO UNDERTAKE RENTAL RESIDENTIAL HOUSING AT RATES AFFORDABLE TO LOW AND MIDDLE-INCOME FAMILIES AND FOR OTHER PURPOSES EXPLANATORY NOTE The housing backlog of the country is one of the major predicament in the country that the government consistently endeavors to address but, ironically, continues to worsen over the years. It stands at 6.5 million units as of 2022. An article of the Philippine Institute for Development Studies (PIDS) published on February 9, 2025 quoted a report of the United Nations Human Settlements Programme or UN-Habitat stating that the estimated housing need in the Philippines is projected to dramatically increase from 6.5 million to 22 million by 2040 if current trends continue. The report further revealed that "informal settler families are estimated at 3.7 million, half a million of which are living in slums and high risk areas in Metro Manila or the National Capital Region." On the other hand, the Department of Human Settlements and Urban Development (DHSUD) officially estimated that the housing backlog in the country will reach 10 million by the end of the term of the current administration. 1 Renting a dwelling unit has long been a viable alternative to Filipino families from various income classes. However, there is a need for dwelling units for rent at ' PIDS - Philippine Institute for Development Studies

reasonable and affordable rates. For the private sector to invest in housing construction which will be rented to the low and middle-income level families at reasonable and affordable rates, a program package of incentives is needed. The Philippine Development Plan 2023-2028 acknowledges that strengthening public rental housing is an option for those who cannot afford homeownership is required to address the large deficit in housing units, fiscal challenges to meet resource requirements for housing production, low absorptive capacity of the National Housing Authority (NHA), and ownership affordability issues.? The Philippine Institute for Development Studies (PIDS) urges the local government units (LGUs) "to partner with the private sector. LGUs can provide the land, extend tax incentives, identify beneficiaries, conduct social preparation activities, and collect housing rent or fees. Meanwhile, the private sector can undertake the development, construction, and management services of the property. "3 The "Incentives for Rental Residential Housing by the Private Sector Act" seeks to provide incentives to private companies which undertake rental residential housing at affordable rates. Such incentives include exemption from taxes and tax credits. The proposed measure will provide two-pronged benefits - affordable housing units for the people and gainful business opportunities for the private sector. This will be instrumental in achieving our nation's goals: • to "increase access of informal settler families, homeless, and underprivileged to housing" under the Philippine Development Plan 2023-2028*; • to "secure home ownership" to live a "maginhawang buhay" under the AmBisyon Natin 20405; and • to "make cities and human settlements inclusive, safe, resilient and sustainable" under the Sustainable Development Goals. 2 Philippine Development Plan 2023-2028 - Philippine Development Plan 3 PIDS - Philippine Institute for Development Studies 4 Philippine Development Plan 2023-2028 - Philippine Development Plan § 2162022 A Long Term Vision for the Philippines

The approval of this measure to address the unmet needs for housing is urgently requested. JINGGOY EJERCITO ESTRADA * Goal 11 | Department of Economic and Social Affairs

Offer oCt: TWENTIETH CONGRESS OF THE REPUBLIC OF THE PHILIPPINES 25 AUG -5 P4:02 First Regular Session ) SENATE RECEI O BY S. No. 939 Introduced by Senator Jinggoy Ejercito Estrada TO PROVIDE INCENTIVES FOR THE PRIVATE SECTOR TO UNDERTAKE RENTAL RESIDENTIAL HOUSING AT RATES AFFORDABLE TO LOW AND MIDDLE-INCOME FAMILIES AND FOR OTHER PURPOSES Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

Section 1. Title. - This Act shall be known as the "Incentives for Rental

2 Residential Housing by the Private Sector Act".

Sec. 2. Declaration of Policy. - It is hereby declared the policy of the State to

provide the basic need of shelter for the homeless low and middle-income with the cooperation of and by providing incentives for the private sector. Towards the attainment of this policy, incentives private sector provided to 7 promote, accelerate and enhance continuity of the public and private sector's cooperation to provide residential housing for rent at reasonable affordable rates.

Sec. 3. Incentives for Rental Housing by the Private Sector. - Any law to the

contrary notwithstanding, the following incentives are hereby granted to encourage, promote and support the private sector to provide rental residential housing for low and middle-income families: (1) Exemption from the Value-Added Tax on lease of properties of the rentals from dwelling units covered by Republic Act No. 7644 and such dwelling units which are hereinafter leased for residential housing of low and middle-income families renovation of existing units into rental

apartments by construction of new units or dwelling residential housing of low or middle-income families; (2) Exemption from any local government taxes on real estate - the rates of levy imposed as of the effectivity of this Act under Republic Act No. 7160 or the Local Government Code of 1991, to the extent of the tax increase arising from the increase in the assessed value of the property from and after the effectivity of this Act: Provided, That the real estate and dwelling units constructed thereon are covered by R.A. No. 7644, the rental regulation law, up to December 31, 1997; (3) Tax credit of twenty-five percent (25%) of the gross rentals for five (5) years following the completion of the new or renovated housing units for rental housing for low and middle-income families earning less than One Hundred Thousand Pesos (P100,000.00) per annum at rental rates of not more than Forty Thousand Pesos (P40,000.00) per annum per unit; (4) Tax credit up to twenty-five percent (25%) of the contractor- developers professional fees earned from construction of new units or renovation of existing units into apartment dwelling units for rental residential housing for middle and low-income families earning less than One Hundred Thousand Pesos (P100,000.00) per annum and to be rented at not more than Forty Thousand Pesos (P40,000.00) per annum per unit; and (5) Entitlement to financing for the necessary repairs to preserve existing rental units, renovation of existing units to apartments for rental housing, or the construction of new units for rental housing developmental financing provision of Republic Act No. 6846, the Abot- Kaya Pabahay Fund, or the socialized housing program under Section 22 (a) of Republic Act No. 7660, the Documentary Stamp Tax Law, or such other Housing Financing for low and middle-income socialized housing programs provided by existing law.

Sec. 4. Implementation and Monitoring. - The provisions of this Act shall be

implemented by the Department of Human Settlements and Urban Development (DHSUD), in consultation with the Department of Finance (DOF). DHSUD shall submit an annual report to the President and the Congress.

Sec. 5. Implementing Rules and Regulations. - Within sixty (60) days from

the effectivity of this Act, the Secretary of DHSUD, in coordination with the Secretary of the DOF, shall promulgate the Rules and regulations to carry out and enfoce the provisions of this Act.

Sec. 6. Separability Clause. - If any provision or part hereof is held invalid or

10 unconstitutional, the remainder of the law or the provision or part not otherwise affected shall remain valid and subsisting.

Sec. 7. Repealing Clause. - Any law, presidential decree or issuance,

executive order, letter of instruction, administrative order, rule, or regulation contrary to or inconsistent with the provisions of this Act are hereby repealed, modified, or amended accordingly.

Sec. 8. Effectivity. - This Act shall take effect fifteen (15) days after its

publication in the Official Gazette or in a newspaper of general circulation. Approvea,