- May 19, 2013
- Posted by: Atty. James Biron
- Category: Property
Classes are going to resume in a few days and a number of students are looking for apartments, boardinghouses or bedspace. They would look for units that are safe, with the necessary amenities, near their school and where the rent is reasonable.
Once they have selected the right unit, they would transfer and enjoy their new pad.
After a few months, their lessor would come knocking and telling them that they have to increase the rent. The ordinary lessee/ tenant would just pay new rent without examining whether this is allowed by law. Meanwhile, the intelligent lessee would look for the law which governs his or her rights.
For this reason I decided to write this article on the Rent Control Act of 2009 to guide lessees/ tenants (and also lessors) regarding their rights under the law. This article is not just for students but even for office workers and other individuals who are either looking for a units to rent or are already occupying one.
What is the limit on the increase in rent?
From August 2009 until 31 December 2013 the rent of a residential unit shall not be increased by more than 7% annually, as long as the unit is occupied by the same lessee.
John leased a commercial unit starting from 01 June 2012 at the rate of Php10,000 per month, can Paul the lessor increase the rent by Php5,000 for a total of Php15,000/month on 01 January 2013?
Yes. Because the law covers only residential units. Commercial units are not covered by this law.
John leased a residential unit starting from 01 June 2012 up the present at the rate of Php10,000 per month, can Paul the lessor increase the rent by Php700 on 01 June 2013?
Yes. Because the increase does not exceed the 7% annual increase limit.
May Paul the lessor increase the rent by 01 May 2013?
No. Because he must wait for one year from the time of the effectivity of the lease contract before he could increase the rent.
May Paul the lessor increase the rent in 01 June 2013 by Php800 for a total of Php10,800 monthly?
No. Because Php800 is an 8% increase from the rent and this is already beyond the 7% limit set by the law.
Supposing John ended the lease by 01 May 2013, can Paul set a rate of Php10,800 to Mark, the new lessee?
Yes. Because the unit is no longer occupied by the same lessee (John). When the residential unit becomes vacant, the lessor may set the initial rent for the next lessee.
Is the above rule applicable to boarding houses, dormitories, rooms and bedspaces offered for rent to students?
No, because the rule is stricter. For boarding houses, dormitories, rooms and bedspaces offered for rent to students, no increase in rental more than once per year shall be allowed. Thus, even if a new boarder replaced the previous boarder, if there was already an increase in 2013 there can be no further increase on the same year.
Robert, who works at a nearby construction company was told by his landlord – the owner of the bedspace for construction workers – where he resides, that the rent will be increased from Php1,500 to Php2,000 per month starting on 01 March 2013, Robert terminated the bedspace contract in 01 April 2013, may the landlord set a price of Php2,500 to the next tenant who will occupy in 01 May 2013?
Yes. Because the strict rule applies only to boarding houses, dormitories, rooms and bedspaces offered for rent to students. If these units are offered for rent to construction workers or other individuals who are not students, then the lessor may increase the rent twice or more in a year as long as the original lessee is no longer occupying the unit.
What is the coverage of this Rent Control Act of 2009?
All residential units in NCR and other highly urbanized cities, the total monthly rent ranges from Php1 – 10,000.
All residential units in all other areas, the monthly rent ranges from Php1- 5,000
John leased a unit in Makati starting from 01 June 2012 up the present at the rate of Php11,000 per month, can Paul the lessor increase the rent by Php1,000 in 01 June 2013?
Yes, because this is beyond the coverage of the Rent Control Act. When the rent is beyond Php10,000 in the National Capital Region, this law no longer applies and so the lessor may increase the rent of the residential unit.
When should the rent be paid?
Rent shall be paid in advance within the first five (5) days of every current month or the beginning of the lease agreement unless the contract of lease provides for a later date of payment. (Sec. 7)
May the lessor demand 2-months advance rent?
The lessor cannot demand more than one (1) month advance rent. (Sec. 7)
May the lessor demand 3-months deposit?
Neither can he/she demand more than two (2) months deposit which shall be kept in a bank under the lessor’s account name during the entire duration of the lease agreement. Any and all interest that shall accrue therein shall be returned to the lessee at the expiration of the lease contract. (Sec. 7)
May the lessor use the deposit to settle rent, electric, telephone, water or such other utility bills or destroys any house components and accessories?
Yes. (Sec. 7)
Supposing the total of the unsettled bills is Php15,000, may the lessor forfeit a deposit which totals Php20,000?
No. The deposits and interests therein shall be forfeited in favor of the lessor in the amount commensurate to the unsettled bills or damage done by the lessee.
May John the lessor sublease his unit to his friend?
As a general rule, he cannot.
Is there an exception?
Yes, there must be a written consent
John subleased his unit to his friend, he informed the lessor through a telephone call, and the lessor agreed, is the sublease valid?
No. There must be a written consent, oral consent is not sufficient.
When may a lessor legally eject a tenant?
a) Assignment of lease or subleasing of residential units in whole or in part, including the acceptance of boarders or bedspacers, without the written consent of the owner/lessor
b) Arrears in payment of rent for a total of three (3) months
c) Legitimate need of the owner/lessor to repossess his or her property for his or her own use or for the use of any immediate member of his or her family as a residential unit
d) Need of the lessor to make necessary repairs of the leased premises which is the subject of an existing order of condemnation by appropriate authorities concerned in order to make the said premises safe and habitable
e) Expiration of the period of the lease contract
May a lessor eject the lessee upon the ground that the leased premises have been sold or mortgaged to a third person?
No. This is prohibited by Sec. 10.
What if the sale or mortgage has been registered, can he now eject the lessee based on any of these grounds?
The rule is applicable regardless of whether the lease or mortgage is registered or not.
What are the penalties for people violating this rent control law?
A fine of not less than Twenty-five thousand pesos (Php25,000.00) nor more than Fifty thousand pesos (Php50,000.00) or imprisonment of not less than one (1) month and one (1) day to not more than six (6) months or both shall be imposed on any person, natural or juridical, found guilty of violating any provision of this Act.
What is the rule after 31 December 2013?
The HUDCC is mandated to conduct every 3 years from the effectivity of this Act to submit to Congress its recommendation on whether a continuing regulation is still necessary or deregulation is already warranted.