As a major output of the National Housing and Urban Development Summit which culminated in April of this year, the Housing Committees in both chambers of Congress spearheaded the formulation of a unified glossary of housing terminologies to finally address ambiguous or at times, conflicting definition of terms related to housing and erase the confusion in program implementation, interpretation of data, inaccurate appreciation of housing problems and challenges towards effective planning by both the government and the private sector.
Fortunately, Republic Act 10884 or the amended balanced housing act was passed in July of this year: a welcome development that will make current housing laws work by ridding the Urban Development and Housing Act (Republic Act 7279 of 1992) of stumbling blocks to socialized housing production. CREBA supported the passage of the law being the 2nd in its 5-Point Agenda for Housing.
Under R.A. 10884, the requirement for subdivision developers to develop socialized housing equivalent to 20% of their main project’s total area or cost was reduced to 15%. Condominium developers are now likewise covered but only for 5%. In the process, a new housing package defined as “socialized condominiums”– complete with all the tax incentives authorized by law — was formulated, a move that augurs well for the millions of workers in our burgeoning urban areas nationwide.
CREBA finds these two developments timely in closing the housing affordability gap by promoting long-term, affordable home loans through a clearer Housing Price Ceiling system, specifically between the Socialized and Economic Housing packages.
For one, the current P450,000 price ceiling for socialized housing is no longer economically feasible – let alone possible — to build new units, whether subdivision or condominium, in urban areas, thus, the need to adjust and formulate a new ceiling that is realistic and responsive to the demands of the market and prevailing economic conditions.
HLURB statistics on licenses to sell issued for both 2015 and 2016 is particularly high for Economic Housing — now ranged from above P450,000 up to P1.7 Million per unit — and for Mid to High-end Condominium Units. This is because price of land acquisition alone in the urban areas ranges from P15,000-P20,000 per square meter, and factoring in development and other costs would make socialized housing delivery a losing investment – hence, a discouraging prospect – for any well-meaning developer under the current price ceilings.
Pag-IBIG Loan take-outs record an average of P750,000-P800,000 per unit and while 30-year loans are currently available, the same is subject to periodic re-pricing.
Building socialized housing, either as main project or for balanced housing compliance, beyond urban zones will only displace or dislocate further our urban workers and will defeat the very purpose for which the original UDHA was amended.
CREBA proposes the adoption of 2 clear-cut housing packages under a homebuyers’ lending scheme payable in 25 or more years, where loans for residential subdivisions or medium-rise condominium units shall be P1,500,000 and below at 3 percent fixed interest rate for socialized housing, and more than P1,500,000 up to P3,199,200 at 4 percent for economic housing. With higher price ceilings that will enjoy fiscal and non-fiscal subsidies from government, developers will have the opportunity to develop more affordable but decent housing units that will benefit their homebuyers.
In determining the maximum price of houses and lots deserving of VAT-exemption, HUDCC, NEDA and BIR have long identified the price ceiling of P3,199,200 as that to be within the limits of what government must provide homebuyers additional assistance for. It will also unify the interpretation of incentives and other rules that transcend various agencies and remove any confusion, conflict or repetitive requirements towards an easier and more cohesive implementation.
Providing housing, especially when done in mass, the impetus it deserves will unleash the widely known economic pump-priming effects of increased activities in construction and real estate, which will then redound to the benefit of both the public and private sectors. It is a move that works to the advantage of all stakeholders and, at the very least, deserves the attention and consideration of government.