Buying a Condo in the Philippines.
(Last updated 19 June 2017)
- 0.1 As A Foreigner You Can Not Legally Buy Land In The Philippines
- 0.2 First Of All, What’s a Condominium?
- 0.3 Condos in the Philippines Are Usually Low. Mid or High Rise Residential Towers
- 0.4 No Matter What The Building Style, This Is How Condos Work
- 0.5 But Bear In Mind What You Really Have Title To Is “Air”.
- 0.6 If You Want a Parking Spot, That’s Going To Cost As Well
- 0.7 Now, How Would You Buy a Unit?
- 0.8 It works like this.
- 0.9 You Now Pay The Remaining 80% of the Contracted Purchase Price
- 0.10 Would You Want To Buy a Condo?
- 0.11 Negative Factors
- 0.12 Positive Factors
- 0.13 One Last Advantage Many Foreigners Never Think Of
- 0.14 But Not For Me, Dave, I Don’t Want To Live in a Condo!
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This is another article suggested to me by a reader a few weeks back. I welcome such suggestions. I like to write about what people want to read about.
As A Foreigner You Can Not Legally Buy Land In The Philippines
This has been the law of the land since Philippine Independence in 1946. A lot of foreigners are annoyed or even angered by this fact, and there are thousands of different schemes over the years which people have cooked up to try to skirt this law.
For the record, I don’t believe there is any legal way for a foreigner to own land in the Philippines except for the limited legal circumstances of inheriting upon the death of a spouse. You can read about that starting here: I Heard A Foreigner Can Inherit Land In The Philippines . That is not what we are going to talk about today. We’re going to talk about condominium property ownership for foreigners.
First Of All, What’s a Condominium?
Well virtually anyone who reads this article “thinks” they know what I am talking about, but just to be sure …
A condominium, usually shortened to condo, is a type of real estate divided into several units that are each separately owned, surrounded by common areas jointly owned.
Residential condominiums are frequently constructed as aapartment buildings, but there has been an increase in the number of “detached condominiums”, which look like four-plex or duplex or even single-family homes but in which the yards, building exteriors, and streets are jointly owned and jointly maintained by a community association.
Condos in the Philippines Are Usually Low. Mid or High Rise Residential Towers
“Usually”, but not always. I’m familiar with a development here in the metro that sold a number of two-story two-floor townhouse units as condominiums. Some places in the Philippines these are referred to as “horizontal condos”.
I also looked at some new build two-story four-plex units on the Subic Bay Freeport Zone that were sold as condos, available, legally to any foreigners.
I’m sure these examples aren’t the only non-tower developments in the Philippines, but it is true that the vast majority of condos are in some form of multi-story, apartment style units.
No Matter What The Building Style, This Is How Condos Work
A developer either buys an existing building (rare here in my experience) or builds one from scratch … by far the most common type of development here, and sells off the individual dwelling units to individual owners.
When you buy a condo unit you get a “fee simple” deed,very much like the deed you would get for any conventional property.
But Bear In Mind What You Really Have Title To Is “Air”.
Your rights of ownership end at the walls of your particular unit. You own no share of the outside walls, the hallways, stairwells, elevators, parking lots, lawns, pools, party rooms, exercise rooms or anything else in the development.
The developer starts a condominium association (usually registered as a legal corporation in the Philippines) which eventually takes ownership of the land and all common use parts of the property. Typically the condo association is governed by a management board which usually has many of it’s members elected by the individual condo unit owners.
Thus the condo association becomes a lot like a Philippine barangay (the smallest unit of municipal organization in the Philippines) with all the attendant advantages of “home rue” by the condo owners and all the disadvantages of political maneuvering, petty jealousy, arguments over budget, etc.
The Association Supports Itself By charging monthly fees. These are usually set by the square meter of floor space of your unit, the bigger your unit the more the monthly fees. They can vary quite a bit, it pays to pay close attention to them when looking for a unit to buy.
It doesn’t matter how much research you do though, because these fees are always subject to change … let’s say and elevator breaks down. Well the Association is going to call in a repairman or buy a new unit if things can’t be repaired, but you can bet the monthly fees are going to be raised to cover the expense.
If You Want a Parking Spot, That’s Going To Cost As Well
One thing most Americans may not consider,especially if buying in any large city Metro area is that a great many Filipinos don’t own cars … and you may not want to as well if you live in a city. But if you do own a car and decide a condo is for you, expect to pay about P500,000 in addition to the cost of your dwelling unit for a parking slot in the community garage. And don’t wait, there are frequently fewer parking slots for sale than people who want them, so you may have trouble if you buy an existing unit which doesn’t already have a slot purchased/assigned.
Now, How Would You Buy a Unit?
If you are looking at a unit that is already built and available, you’d normally go through the development’s sales and management office, on site. Either cash payment or 20% down and then financing as discussed here.
For most units you see advertised you are going to discover the unique world of what I call Philippine “bootstrap” financing. Even the largest condominium developers don’t front all the cash needed to build out their sites to completion. They get their financing from prospective buyers.
It works like this.
If you see a model unit you like and want to buy one like it, you pay an upfront reservation fee and then often a very small monthly payment on the required down payment. Sometimes these payments are even interest free.
Depending upon the date the condo unit you want is scheduled to be completed, your payments may stretch out across several years.
At the end of the series of down payment installments, the unit you are purchasing is ready for occupancy and you have satisfied the common 20% down payment requirement.
You Now Pay The Remaining 80% of the Contracted Purchase Price
You can, of course pay cash, or you can finance the balance through a bank home loan/mortgage, exactly like a conventional home mortgage. (more info on Philippine home loans here)
Once you have your financing secured you get to move into a brand new place, with basically no maintenance, security and other free-standing home owner concerns.
Would You Want To Buy a Condo?
Well everybody has to live somewhere. A condo unit would be only one of many solutions to having a roof over your head. Like any other choice there are pluses and minuses.
The majority of condo units on the market are expensive in terms of floor space. Units are typically quite small interms of what most Americans are used to.
There are going to be rules and regulations regarding a lot of things, espcially how you use the common areas and amenites of the development. This is both good and bad, but you don’t have as much freedom as you would if you owned (or rentted or leased) a free-standing house.
Especially in high-rise units, elevators are going to be choke points … even in the best buiding you’ll spend a lot of time just going up and down just to get anywhere.
As with every type of multi-unit living you are always going to be interacting and dealing with other occupants.
As the building ages and things break down you can be pretty sure you monthly association fees are going to rise over the years.
A great deal of your life is gong to be regulated by the management office and rule and regulations of the condominium board. You will have one vote among many when you have concerns, or you might get enmeshed in board politics and stress yourself out.
You can probably think of some others on your own, this article is already getting too long to suit me.
There are actually quite a few of these. The biggest plus factor, previously mentioned as a potential negative, is that the project will have a professional, salaried full-time management staff, security guards and such.
In addition to day-to-day running of the place, most management offices will handle renting out you unit for you if you want to go live somewhere else for a time.
When you want to take a trip, you just tell the management office when you’ll be gone and lock your door and leave. Leaving a house sitting empty in the Philippines can be a real worry, but in a well-run condo complex you are pretty much worry free.
What other positives can you think of?
One Last Advantage Many Foreigners Never Think Of
If you are not married to a Filipino or otherwise eligible for a common Permanent Residency visa, about the only other way you can live long-term without hassle is with an SRRV (Special Resident Retirement Visa).
The SRRV comes in many “flavors”, all with different requirements, but the requirement that leaps to most people’s minds is significant investment requirement … especially for younger folks. As much as $50,000 USD.
Well you can convert those large retirement deposits to approved investments and a primary approved investments is a condo unit. Buy a dwelling and live forever in the Philippines. Could work for some.
But Not For Me, Dave, I Don’t Want To Live in a Condo!
I understand. After all, I’m not living in a condo myself ;-).
But the fact so many seem to miss is, nobody requires you to LIVE in the condo you might buy. You just have to BUY it (through the specific procedures of the PRA (Philippine Retirement Authority) who administers the SRRV program.
Once it’s purchased,you can rent it out or lease it out long-term and go ahead and live anywhere you want to. If you buy in popular areas it’s often possible to make a little money every month as well.
So what else can I tell you about Buying a Condo in the Philippines.?