Effects of the Rent Control Act of 2009 (R.A. 9653)
President Arroyo’s approval of said act last 14 July 2009 and its effectivity 15 days after the completion of its publication have caused various effects in the real estate rental business. Among those effects implied from the law itself are as follows:
- All lessors of residential units in the National Capital Region and other highly urbanized cities who are currently imposing total monthly rents within the range of PHP1.00-PHP10,000.00 for each leased unit are obliged to follow the law. Lessors of residential units in other areas who are imposing total monthly rents within the range of PHP 1.00-PHP 5,000.00 for each leased unit are likewise obliged to follow the same.
The only lessors exempt from the provisions of the Act are those whose total monthly rents do not fall within the ranges stated reckoned from the effectivity of the Act; and those who are still bound by existing lease contracts with their lessees.
- All lessors covered by the Act must follow the limits set on increases in rent, to wit:
- No increase in rent shall be imposed 1 year from the effectivity of the Act.
- After the expiration of this 1 year period until 31 December 2013, the rent cannot be increased by more than 7% annually if the unit is occupied by the same lessee. In case the unit becomes vacant, the lessor is not bound by the maximum limit. Nonetheless, for boarding houses, dormitories, rooms and bedspaces offered for rent to students, no increase in rental imposed more than once each year shall be allowed.
- All lessors covered by the Act can neither demand more than 1 month advance rent nor more than 2 months deposit. Said deposit shall be kept in a bank under the lessor's account name during the entire duration of the lease agreement. Any and all interest accruing from such deposit shall be returned to the lessee at the expiration of the lease contract. Forfeiture of this deposit is allowed only in specific instances such as the lessee’s failure to settle the rent, utility bills, or destruction of any house components and accessories.
- All lessees renting in residential units covered by the Act should pay the rent on the day set in the lease agreement. In case there is no lease agreement, the lessee is obliged to pay the rent in advance within the first 5 days of every current month or the beginning of the lease agreement. Arrears in the payment of rent for a total of 3 months without any refusal on the part of the lessor to accept the payment, subjects the lessee to ejectment.
- All lessees whose rental payments are refused by the lessors despite their existing agreement are allowed to deposit the rent by way of consignation to any of the following entities: a. court; b. the city or municipal treasurer, as the case may be; c. barangay chairman; and d) a bank. The deposit must be in the name of the lessor and he/she must be notified of such within 1 month after his/her refusal. In case said refusal continues, the lessee can continue depositing the rent in the same way within 10 days of every current month.
- All lessees are entitled to remain in the premises regardless of the existence of a mortgage or sale of the property to a third person. A similar right exists even though either the sale or mortgage is registered.
- All lessees are entitled to a formal notice 3 months in advance of the lessor’s legitimate need to repossess the property for his/ her own use or for the use of his/her immediate family. In case the lease is for a definite period, lessees are entitled to remain in the premises until the expiration of the lease. Meanwhile, the lessor is prohibited from leasing the unit or allowing its use by a third party for at least 1 year from the time of repossession.