HOA can impose property construction restrictions

Can a homeowners' association restrict me to only build a two-story house?. Are these kinds of restriction allowed?

Yes, homeowners' associations (HOAs) and exclusive subdivisions often have restrictions on home construction, including height limits, architectural styles, and building materials. These rules are typically outlined in the deed of restrictions, subdivision rules, or master deed that you agreed to when purchasing the lot.

One of the most important features of Philippine Property law is the right to ownership which is protected by Republic Act (RA) 386, otherwise known as the "Civil Code of the Philippines." Articles 427 and 428 of the Civil Code of the Philippines define ownership as the independent and general right of a person to control a thing, particularly in terms of use, possession, enjoyment, disposition, and recovery, subject only to certain limitations established by law or agreements, viz.:

"Article 427. Ownership may be exercised over things or rights.

"Article 428. The owner has the right to enjoy and dispose of a thing, without other limitations than those established by law.

"The owner has also a right of action against the holder and possessor of the thing in order to recover it."

Relative thereto, Sections 10 and 18 of Republic Act (RA) 9904, otherwise known as the "Magna Carta for Homeowners and Homeowners' Association," provide for the rights and powers of the homeowners' associations (HoAs), to wit:

"Section 10. Rights and Powers of the Association. - An association shall have the following rights and shall exercise the following powers:

(j) Cause compliance with regard to height regulations, easements, use of homes, buildings, edifices, or structures that may be built within the subdivision, in accordance with the National Building Code, zoning laws, HLURB rules and regulations, existing local ordinances, and existing deeds of restriction;"

Clearly, our laws recognize the owner's right to control the property in line with these principles, subject to any limitations imposed by contracts, local ordinances, or zoning rules and regulations. Relative to validity of restrictions in deeds or contracts, Cezar Yatco Real Estate Services, Inc. vs. Bel-Air Village Association, Inc. GR 211780, 21 November 2018, with Honorable Associate Justice Marvic M.V.F. Leonen as ponente, is instructive:

"The Deed Restrictions is a restrictive covenant that governs how lot owners can use or enjoy their properties. It was annotated on the land titles issued to the lot owners and it is not disputed that lot owners are bound by these annotations under Section 39 of Act 496, or the Land Registration Act, which provides:

"Section 39. Every applicant receiving a certificate of title in pursuance of a decree of registration, and every subsequent purchaser of registered land who takes a certificate of title for value in good faith, shall hold the same free of all encumbrance except those noted on said certificate, and any of the following incumbrances which may be subsisting, ..."

Thus, if there is indeed a validly instituted restriction on the number of stories or floors that can be built on the property that you purchased, then the same may be imposed or implemented by the HoA.

Corollary, as a buyer, you are duty-bound to comply with such restriction as it forms part of your contractual obligation when you purchased the subject property. Although, as owner of the property, you have rights to use and develop it, these rights are not absolute and must comply with laws, contracts, local ordinances, and zoning rules and regulations.

Source: Manila Times

More Filipinos choosing to rent–not buy–homes

More Filipino families were choosing to rent spaces rather than own homes, a “notable shift” that was more common among households in the urban jungle of Metro Manila as high costs and slow wage growth dash homeownership ambitions.

That was according to the 2021 results of the Consumer Finance Survey released by the Bangko Sentral ng Pilipinas (BSP), which conducts the nationwide triennial poll to check the financial condition of Filipino households.

Results of a survey of 16,212 families between March and December 2022 showed 11.3 percent of respondents preferred rental accommodations in 2021—the year when the economy slowly reopened from pandemic-led lockdowns that threw the Philippines into a recession.

That was higher than the 10.2 percent recorded in the previous survey round in 2018.

By area, renting or leasing was more common in the National Capital Region (NCR) at 34.9 percent, followed by Balance Luzon at 10.6 percent. But it was less popular in Visayas and Mindanao, where homeownership rates are particularly high.

Nevertheless, survey data showed seven in every 10 families in the country owned or co-owned a house.

Homeownership in areas outside of NCR was at 73.9 percent, much higher than the 43.9 percent rate for the densely populated Metro Manila, where sluggish wage growth may not keep up with rising home prices.

Even during the pandemic, BSP data showed residential property prices in the country grew by 4.9 percent in the final quarter of 2021.

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Apart from the shifts in the mode of home acquisition, the latest BSP survey also provided other insights into the financial condition of Filipino families.

Data showed nonfinancial assets continued to form the foundation of Filipino household wealth portfolios, with home appliances and equipment still being the most commonly owned assets at 96.6 percent.

Within the appliance category, mobile phones (92.8 percent) continued to surpass televisions (81.1 percent) as the most common household item.

Residential properties (69.9 percent) were the second most commonly owned nonfinancial asset of households, followed by vehicles (35.3 percent). Among vehicles, motorcycles (61.7 percent) continued to be the most popular.

The composition of financial assets revealed interesting patterns of financial behavior. Deposit accounts recorded the highest ownership rates at 35.3 percent, followed by traditional cash savings kept at home (28.7 percent) and the rapidly growing category of e-money accounts (24.3 percent).

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Source: Inquirer

Philippine homeownership dreams stifled by rising costs and stagnant wages

A 28-year-old Filipino entrepreneur, has been renting a condominium unit in Quezon City near the Philippine capital for two years now and doesn’t plan to buy his own house soon.

“Owning a home is one of the biggest financial decisions you can make,” he said.

“Outside of saving for a down payment, there are a number of factors I’d need to take into consideration before making a concrete decision.”

A study by PhilhealthCare, Inc. (PhilCare), a health maintenance organization, found that 39% of Generation Z (Gen Z) people — those born in the late 1990s to early 2000s — cited homeownership as one of their top worries.

“For a young working professional, it can be challenging to acquire a property right away, especially with the rising prices,” Roy Amado L. Golez, Jr., director of research and consultancy at Leechiu Property Consultants, said in an e-mailed reply to questions.

“If their only source of income is their salary, they need to set aside enough funds for a down payment and make sure they’re able to sustain installment payments,” he added.

Buying a house today has changed drastically from just a few decades earlier.

“Housing availability was already a major issue even decades ago,” Mr. Golez said. “There were not enough homes for the general population, and this caused terrible traffic even then.”

“During the time of our parents, buying a home in Metro Manila meant buying a house and lot or townhouse with a lot of space. Land prices in general were still affordable relative to household income,” he pointed out. 

An account director and freelancer owns a condo unit where she lives in some days, but for the most part, she still lives in her parents’ house.

“Given the current market and landscape for homeownership, it’s quite difficult to own and eventually maintain the fees for a home, whether it’s land tax or other association fees,” she said in an Instagram message.

While she has multiple income sources to help her sustain the ownership, she said she needs more to live comfortably especially once a family comes into the picture.

Owning a condo unit was much easier a few years ago, when financing for one that costs P2 million to P3 million was effortless, Joey Roi H. Bondoc, a director and head of research at Colliers Philippines, said.

“The required monthly income for you to be able to get a bank approval was much easier at that time,” he said. “But because of the increase in prices, the hurdles also got higher. That has eventually resulted in young people having a difficult time buying these condominium units.”

The average appraised value of new housing units in the Philippines stood at P86,417 per square meter in the third quarter of 2024, 31% higher than in 2020, according to data from the Philippine central bank.

Jet Yu, founder and chief executive officer at PRIME Philippines, said the property market has undergone a “significant transformation” in the past decades, with more people living in urban areas.

“This shift has driven increased demand for housing in metropolitan areas, pushing property prices higher and reshaping homeownership trends,” he said in an e-mailed reply to questions.

Data from property developer DMCI Homes, Inc. showed that inquiries for rental and rent-to-own properties as well as units for purchase have been increasing steadily over the years.

“As thousands of new households are created each year, the need for housing, whether for lease or purchase, therefore remains strong,” Januel O. Venturanza, DMCI Homes vice-president for marketing said.

“The challenge is finding the right home and arrangement — whether for rent, rent-to-own or purchase — that suit the customer’s lifestyle and budget,” he said in an e-mailed response.

Mr. Yu said the interest in homeownership is prevalent among the younger generation.

“More financially independent and willing to take risks, many Millennials view condo ownership as a symbol of success,” he said, referring to people born between the 1980s and the late 1990s. “Similarly, Gen Z — also known as Zoomers — are entering the workforce, bringing with them a preference for condo living.”

Both Millennials and Gen Z — people born from 1997 to 2012 — are “shaping residential condo demand,” Mr. Yu said.

He noted that in recent years, there has been a noticeable shift toward renting, particularly among young professionals and small families. “The increasing popularity of rent-to-own schemes has provided flexibility for those not yet ready to commit to full ownership.”

Central bank data showed that the prices of condominium units fell 9.4% in the third quarter from a year earlier, reversing 10.6% growth in the previous quarter and 8.3% a year ago.

Filipinos preferred single-detached homes and land ownership a few decades ago, Mr. Yu said, but with rising land prices, horizontal residential developments have become scarce, particularly in Metro Manila. 

“As a result, vertical living — primarily through condominiums — has become the norm in major commercial business districts and is now widely accepted in key cities across the country,” he said. “With the median age of Filipinos at 25.34 years, a significant portion of the population will continue to drive condo sales and rentals in the coming years.”

Property developers have been cutting the sizes of units to a studio or one-bedroom type to cater to younger buyers, Mr. Yu said.

“Due to affordability issues, renting of homes by families has always been the practice,” Mr. Golez said. “This is especially true for single or starter families. Of course, owning your own home has always been the dream of every Filipino.”

But elevated real estate prices are the main barrier to homeownership.

“In general, the cost of construction, land and financing has grown faster than the salary levels of the population,” Mr. Golez said.

The House of Representatives in February approved on second reading a bill that seeks to give minimum wage workers a P200 daily increase. The Senate approved a counterpart proposal for a P100 daily wage increase for private-sector workers in February last year.

Labor groups have said these proposed increases are not enough amid spiraling prices especially of food.

Mr. Golez said inflation’s effect on building materials, labor, construction and financing costs, as well as the growing scarcity of land in Metro Manila would continue to push up property prices.

“There are potential buyers that have been commenting on how they find primary unit property prices are on the high side,” he said. “However, we don’t see a high possibility for developers to lower prices.”

Mr. Yu said elevated property prices are driven by sustained urbanization and steady demand for residential properties, particularly in key cities.

“A young population with a strong motivation to invest in condominiums continues to fuel this demand,” he added.

Condominium prices had been rising more than 10% annually before the COVID-19 pandemic, he pointed out.

“However, in the past year, there were quarters where condo prices slightly dipped,” he said. “Moving forward, price increases are expected to remain moderate, likely within the single-digit percentage range.”

Central bank data showed housing prices nationwide declined 2.3% in the third quarter, the first contraction in more than three years.

‘BUYER’S MARKET’

Analysts said homeownership prospects are possible for young professionals despite these hurdles.

“If there is one phrase to describe this market, it’s a buyer’s market at this point, meaning they can really haggle prices,” Mr. Bondoc said.

Colliers data showed that the vacancy in Metro Manila’s secondary market rose to an all-time high of 23.9% in 2024 as Chinese workers left the Philippines after a ban on Philippine offshore gaming operations.

“Now it’s a buyer’s market, and the market dynamics are shifting toward the preferences of young buyers, whether in terms of amenities, in terms of pricing, and even in terms of foreign exchange,” Mr. Bondoc added.

The Bangko Sentral ng Pilipinas (BSP) said real estate loans rose 7.9% in the third quarter of 2024 from 7.2% a quarter earlier and 5% a year ago.

“This shows sustained demand for real estate loans,” it said in an e-mailed statement. “Against this backdrop, property analysts remain positive about the strong demand for real estate loans in the country.”

It expects the continued supply of residential condominiums as developers offer more appealing payment terms for pre-selling and ready-for-occupancy projects.

It added that the industry growth would continue to be driven by urbanization, e-commerce, tourism recovery and evolving work models.

While owning a home may seem like an impossible goal, it is still achievable with the right financial habits, Mr. Venturanza said.

“Start preparing as early as possible, define and tenaciously pursue long-term goals, and do your research,” he said. “Look at developer track records, compare properties and identify which ones offer truly superior overall value.”

Mr. Golez said young professionals should start saving and investing as soon as they can.

“Create an emergency fund of six to 12 months of personal overhead. Do your research on the property you want to purchase and look at other options available to you,” he said.

“The more information you have, the better armed you will be in deciding on your housing investment. Always have the habit of setting aside a portion of what you earn today. You’ll eventually have enough to start buying your own home,” he added.

Mr. Venturanza said a good portion of DMCI customers are below 35 years old.

“Property prices continue to increase, so developers are trying to find ways to address this issue of affordability,” he said.

He added that they are looking to offer flexible and friendlier payment terms.

“Young professionals and families are a significant part of our target market, and we recognize their evolving needs when it comes to housing,” he said.

For example, DMCI Homes offers amenities that cater to younger buyers, such as coworking spaces and fitness facilities.

“Developers need to be more creative and implement out-of-the-box strategies to really attract the young market at this point,” Mr. Bondoc said.

A 23-year-old web developer and entrepreneur based in Manila, sees the opportunities of owning a home even if it’s not an easy task.

“It’s the best time in history to acquire wealth,” she said. “Everybody has a shot at building their own wealth through many platforms and spaces of opportunity. This can be done through resourcefulness and skill, in addition to plain grit.”

“I have been looking into owning a home recently, but it likely won’t be tomorrow,” she added.

Source: Business World