The property boom in the Philippines has attracted not only Filipinos but foreign investors as well. However, not everyone is aware of the actual laws behind property ownership in the Philippines. Can foreigners actually own land? What are the restrictions?
The 1987 Constitution generally reserves ownership of private land to Filipino citizens. To some extent however, foreigners and former Filipino citizens are allowed to own properties. Although there are some restrictions, owning real estate or land in the Philippines is not impossible. Unlike other countries where the only prerequisite is money; property ownership is restricted to Filipino citizens or juridicial persons with at least 60% Filipino interest.
Dual Citizens and former Filipino citizens are also accorded the right to own private lands subject to some limitations imposed by law. Except in instances when land is inherited, foreigners are restricted from owning private lands. They are only allowed to lease private land for up to 50 years.
This half-century period is only renewable once for a further 25 years at most. In terms of condominium projects, the foreign ownership rule applies wherein foreigners can only own up to 40% of the entire project.
Aside from foreign ownership limitations, there are also limitations on purchases made by former natural-born Filipino citizens who have acquired foreign citizenships and have not applied or have not been granted dual citizenship. They may purchase property however some limitations to this include:
1. The land must be used for business and residential purposes only.
2. Acquisition of land may be through sale, donation, foreclosure, tax sale, or execution sale.
3. If land is for residential purpose, there is a maximum of 1,000 square meters of urban land hectare of rural land allowed.
4. A former natural-born Filipino citizen can acquire either urban or rural lots, but not both.
5. If land is to be used for business purposes, a maximum of 5,000 square meters of urban land or 3 hectares of rural land is allowed.
6. A maximum of 2 lots not exceeding the maximum limit in total combined area is allowed. Lots must be located in different cities or municipalities.
7. Either one or both spouses may avail of this privilege, but the above limits must be observed. Holders of dual citizenships are allowed full rights of possession of real estate in the Philippines. Foreign nationals and foreign companies may indirectly own private lands by taking a minority interest (only up to the extent of 40% equity) in corporations that are considered Philippine nationals.
Foreigners can own condominiums under the principle of the 60%-40% rule. They may purchase up to 40% of the condominium and if the purchase is done, their shares can entitle them to be a stockholder of a condominium corporation.
Most condominiums in the country are usually vertical developments and high rise buildings. In addition, a Special Resident Retirement Visa (SRRV) is also offered by the government to foreigners who wish to stay permanently or those who would like to frequently visit or stay for long periods in the country. Holders of SRRV can also get additional benefits aside from being allowed to buy a condominium property, lease a parcel of land or a house and lot. Information regarding other benefits of SRRV Visas is available on the Philippine Retirement Authority Website.
Source: KMC MAG Group-Savills Research
To find out more about property investing in the Philippines, attend the Australian Filipina workshop. The workshops are free but limited numbers only.