The Bureau of Internal Revenue (BIR) has caught wind of the booming real estate business in the Philippines and intends to require developers to give advanced payments of value added tax (VAT) on real estate assets. At the moment, real estate developers pay 12% VAT on properties on the 25th of the month after they are sold. The BIR, however, proposes that they pay a 3% VAT annually. If the developer receives a cash payment, the company should remit the 3% on or before the month after a sale, and the 12% on the 25th.

This new regulation will only cover real estate companies and will not cover one-time sales of personal property.

Ayala Land Premier will be raising the standards of high class living as they develop a neighborhood that out-classes even the fancy Forbes Park.  The 70-hectare Abrio Nuvali in Sta. Rosa Laguna is a low-density subdivision that has room for only 380 families.  Featuring wide, tree-lined roads, open spaces, bike paths, and parks, Ayala intends to impose high standards to make sure that each property is occupied by only one family. Lot cuts start at 800 sq m and go up to 1,200 sq m.  Minimum construction cost for a house in each property is around Php 10 M.  Other amenities include a clubhouse, a multipurpose hall, a gym, playground, WiFi internet, infrared fences, and underground utilities.

Construction tycoon Reghis Romero II says that a possible US recession due to their housing crisis will not have any negative effects on Philippine real estate. This is due to the fact that the Philippines has a very strict loan to collateral ratio for housing loans. Besides that, Philippine banks do not make use of the same mortgage system as the US, which is rising steadily in home foreclosures.

To prevent any similar real estate crisis in the Philippines, the Chamber of Real Estate and Builders Association (CREBA) implemented a contract-to-sell system instead of a mortgage origination to document sales of house and lot packages. The advantage here is that the buyer won’t have his name on the title until he has paid. If the buyer fails to pay, the contract goes back to the bank, who can use or sell the property.

Another project that will help the local real estate industry are government housing projects like the One Million Homes Program. This aims to address the 20-year housing backlog of 4.5 million houses. For that to happen, at least 500,000 low-cost housing units need to be built per year; however, there are only around 200,000 houses that are built or being built between the years 2005 and 2010.

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DENR secretary Lito Atienza will be drafting and implementing an environmental plan to save Boracay island from destruction caused by construction projects all over.  Atienza’s plan includes a comprehensive strategy to maintain air and water quality and solid waste and flood control.  The final master plan will be presented to all resort holders property holders engaged in new developments Boracay, before being shown to the Department of Tourism, the Philippine Tourism Authority, and the committee formed by President Gloria Macapagal-Arroyo to look over developments in the island.  Atienza says Mayor  Ciceron Cawaling already agreed to put a halt on all construction before the environmental plans get implemented.

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The government-owned Pag-IBIG Housing fund allocates a record high of Php 30B for low-cost housing due to the demands resulting out of the low interest rates. The average retail loan at Pag-IBIG is around Php 475,000 per borrower and based on this amount, they’re targeting a loan growth of around 28% this year. A challenge for Pag-IBIG, however, is to raise more funds to meet the increasing demands for low-cost housing.

Now is the best time to borrow from Pag-IBIG because you can get financing for low-cost houses at an interest of 6 or 7%, for a term that lasts up to 30 years. For a Php75,000 house at 7% a year, the monthly amortization will cost around Php4,000 to Php5,000, which is far more affordable than renting a house of the same quality (around Php10,000/month).  Even OFWs can avail of Pag-IBIG loans now, especially those who are earning in currencies that are gaining against the dollar such as the euro.

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Vice President Noli De Castro lowered the interest rates for Pag-Ibig Housing Loans, a government-based institution that offers affordable housing loan packages for low and middle income families. Loan packages worth Php 300,000 will have a 6% interest rate while loans between Php 300,000 – Php 500,000 have a 7% interest rate. Loans over Php 500,000 to Php 1 million will have 10.5% interest, and loans over Php 1 million to Php 2 million have an 11.5% interest rate.

For more information on how to avail of Pag-Ibig’s housing loan, visit their website.