Chamber of Real Estate & Builders' Associations, Inc.

A Home for Every Filipino

From the Chairman

Charlie A.V. Gorayeb

Charlie A.V. Gorayeb

Chairman of the Board, CREBA Chairman, CREBA Advocacy & Legislative Affairs Committee Honorary Consul General, Republic of Djibouti

Socialized housing: better pricing and loan terms combined

CREBA supported the passage of Republic Act 10884 or the amended balanced housing act in 2016 to 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.

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 115%. Condominium developers are now likewise covered by the balanced housing program but only for 5%.

The law further directs the Housing and Urban Development Coordinating Council (HUDCC) and the National Economic and Development Authority (NEDA) to jointly determine and set separate housing price ceilings for socialized subdivisions and socialized condominium housing projects — complete with all the tax and non-tax incentives authorized by y law. For its part, the Housing and Land Use Regulatory Board (HLURB) is mandated by Batas Pambansa No. 220 to promulgate the technical s standards for socialized housing development.

The new and multi-tiered set of socialized housing price ceilings of 2018 provides that socialized subdivisions shall cover housing projects sold between P480,000 to P530,0000 for units between 22 up to 32 sqm.

For condominiums, a 22 sqm. unit is considered socialized if sold at P700,000 in NCR and P600,000 in other areas; or 24 sqm. for P750,000 per unit in NCR and P650,000 in other areas.

True, the former P450,000 socialized housing price ceiling was indeed no longer economically feasible – let alone possible –to build any new unit 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.

But, the number of HLURB licenses to sell in the last 3 years is particularly high for economic housing now sold for 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 to P20,000 per square meter.

On the other hand, Pag-IBIG loan take-outs are at an average of P800,000 per unit and while 30-year loans are available, the same is subject to periodic re-pricing.

This is why CREBA continues to push for the legislative adoption of 2 clear-cut housing packages under a homebuyers’ lending scheme payable in at least 30 or more years. In its proposed Comprehensive Homme Financing Program (CHFP), loans for residential subdivisions or medium-rise condominium units shall be up to P1.5 million and below at 3 percent fixed interest rate for socialized housing, and above P1.5 million up to the VAT-free threshold of P3,199,200 at 44 percent for economic housing.

The nagging problem, really, of homelessness is not merely the price and size of the units. It is access to cheap, long-term and affordable credit that is not currently available e even for gainfully employed workers.

No wonder urban workers end up forever renting in informal settlements or suffer exorbitant fees in better communities. If government allows better quality homes to enjoy fiscal and non-fiscal subsidies, developers will have the opportunity to build more affordable but decent housing units for the homebuyers’ optimal benefit.

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 housing program implementation.

Published in the Manila Bulletin January 2016

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