An estimated 2.72 million low-income families nationwide in the Philippines will be impacted by the new rental rate increase cap imposed by the National Human Settlements Board (NHSB). The Department of Human Settlements and Urban Development (DHSUD) Undersecretary Henry Yap clarified that the 4 percent rent increase cap applies to families paying P10,000 and below. The policy came into effect on January 1 and will remain in place until the end of the year.
It is important to note that landlords cannot immediately implement the rate increase. They must wait until the current contract with their tenants expires, and the 4 percent rate increase can only be implemented during contract renewal. Undersecretary Yap emphasized that the decision to impose a cap on rental rate increases was based on the recommendation of the National Economic and Development Authority (NEDA). The aim is to establish a uniform maximum percentage increase and prevent unwarranted spikes in rental rates for lower-income families.
To ensure that the policy was fair and well-informed, it was reviewed and revised according to the latest empirical studies, such as the Annual Family Income and Expenditure Survey and Census of Population and Housing. These studies provided valuable insights into the average income of Filipino families, which was estimated at P307,000 per year from January to December 2021. Armed with this data, the multi-agency NHSB made an informed decision to set the 4 percent rate increase cap as a sound and feasible figure.
The new policy represents a significant change from the previous rate caps, which were divided into three tiers. Last year, families renting below P5,000 were allowed a 2 percent increase, while those renting between P5,000 and below P9,000 faced a 7 percent increase. Families renting from P9,000 to P10,000 experienced an 11 percent increase. However, this year, the NHSB consolidated these tiers into a single rate, resulting in the 4 percent increase cap.
It is important to note that the rental rate increase cap only applies to residential properties, including dormitories, rooms, and bed spaces. Violators of the policy may face penalties, including a minimum fine of P25,000 and a maximum fine of P50,000, as well as imprisonment for up to one month or one day, depending on the discretion of the court.
The implementation of the new rental rate increase cap aims to strike a balance between protecting the rights of tenants and ensuring the sustainability of the rental market. By setting a reasonable limit on rate increases, the policy benefits both tenants and landlords. Tenants can have more predictability in their housing costs, while landlords can still make necessary adjustments to cover maintenance and other expenses.
In conclusion, the new rental rate increase cap imposed by the NHSB in the Philippines has a significant impact on low-income families. The policy ensures that rental rates remain affordable and prevents excessive increases that may burden lower-income households. By considering empirical studies and consolidating rate tiers, the NHSB has implemented a fair and feasible solution. It is crucial for landlords to adhere to the policy to avoid penalties and contribute to a more stable and equitable rental market.
Source: The Manila Times
