++NOTE: This is the free online version of my book Chasing Your Philippine Dream: An Expat’s Guide to the Philippines. This voluminous tome has been (inconsistently) updated over the last 13 years and can be purchased either HERE on the Amazon Kindle store (more expensive option) or directly HERE from our site via Surecart. All things considered; I’d go with buying the less expensive digital version off of Surecart. It’s the exact same book, and I really don’t think Jeff Bezos needs any more money.
And in case you are wondering why I am publishing the chapters out of order, it’s simply because I want you to buy the actual book. I gots a family to feed! ++
PURCHASING PROPERTY IN THE PHILIPPINES
One of the dreams some of us have in coming to the Philippines is that of purchasing a nice little tract of land and building a nice home. After seeing endless videos of the tranquil coastlines with white sand beaches, swaying palm trees and exquisite views, one can’t help but summon such fantasies. There’s only one small problem with such a dream, however: Foreign nationals are not allowed to own land in the Philippines. The laws on this are very strict.
WHO CAN OWN PROPERTY IN THE PHILIPPINES?
Generally, the only people who are allowed to own actual property in the Philippines are Filipino citizens. These are the only exceptions:
- A natural-born Filipino who has gone abroad and acquired foreign citizenship can own land in the Philippines. They are, however, only allowed to own up to 1,000 square meters of land or – in the case of dedicated agricultural land – up to 1 hectare. This would apply to child that leaves the Philippines, acquires foreign citizenship and allows their native-born citizenship to lapse.
- Filipinos with dual citizenship enjoy the same freedom of property ownership as they did with just their Philippine citizenship.
- A Filipino who is married to a foreigner can purchase and own land. If the Filipino ever renounces his/her citizenship, however, that liberty ceases to be.
- Even if the foreigner’s Filipino spouse passes away, lands and domiciles they possessed are not passed onto the surviving spouse. He or she is simply allowed to sell it – and if that isn’t done within a certain period of time, ownership of such land is conveyed to the state.
Why Can’t Foreigners Own Land in the Philippines? The answer to this one is fairly obvious. If the Philippines allowed foreign property ownership, half the islands would be speaking Korean and Mandarin within a few years. Add the simmering resentment against hundreds of years of ownership by foreign nations (Spain and the United States), and the provisions against foreign land ownership starts to make a whole lot of sense.
BUILDING A HOUSE IN THE PHILIPPINES
Securing property and building a home in the Philippines can be a bit of a gamble. National law forbids foreigners from owning property, so no matter what, any home you build here will never truly be yours. There are a few ways to get around this property laws, but long-term success in such matters could be an issue. Yes, there are ways to purchase property if you belong to a corporation that is at least 60% Filipino owned, but if a local magistrate ever concludes that you incorporated in order to purposely circumvent the Philippine property ownership laws, you’re in trouble. We’ll take a short peek at creating a Philippine corporation in order to purchase property (and check out leasing rights) after we look at the pro’s and con’s of building/owning a home in the Philippines.
HOME OWNERSHIP PRO’S
Low construction costs due to local labor rates – average wage to a Filipino laborer is around $12 a DAY. Good for the home owner, not so much for the laborer
Can purchase a larger lot for more privacy – For me, this is incredibly important. People are annoying and noisy, and when in my home, I prefer not to see or hear them.
Can be viewed as a long-term investment when compared to renting – As in the West, it is more profitable to own than it is to rent. Yes, rent is cheap in the Philippines, but it is still money being thrown out the window.
Can customize it in regards to layout and Western style fittings – Filipinos have a certain way to building homes. Usually, these methods do not include dedicated grounds for the electrical system and low cement to sand/aggregate mixtures. If you’re having your own home built, you can include these Western amenities.
Is something tangible that you can pass on to your wife and/or children – For me, this is important. I am most likely going to ‘pre-decease’ my wife, so being able to pass on a nice home for her and the kids is imperative. Well, that and a few commercial rental sites that we are planning on building.
HOW OWNERSHIP CONS
Foreigners cannot own land in the Philippines – We’ve discussed this, and there really is no way around it. I have seen two instances where foreigners I knew lost ‘their’ homes because of cheating or abusing their wives. It’s rare, but it does happen.
Land in the Philippines can be more expensive than that in the West – It may seem counter-intuitive, but it’s true. In some areas of the Philippines, land can be very expensive. And although prospective buyers may complain, it’s not going to go down – just up.
You will only get about 50% of the house value in case things don’t work out – If you and your better half ever go your separate ways, you will have to settle for half of what you paid yourself for the house. Not 50% of the property – just 50% of the house. And that’s only if you kept meticulous records of what you spent, kept all of the receipts and can find a kindly judge.
Houses are notoriously difficult to sell in the Philippines – I have seen houses on the market here that have failed to sell in over ten years. It is mind boggling at first, but after a while you will figure it out: Most Filipinos cannot afford a nice house, and wealthy Filipinos would much rather purchase their own empty lot and build a house to their specs. In a few instances, I have even seen a wealthy Pinoy buy a house and lot, demolish the house and build up a new one in its place. Yeah, although generally poor, there is a good deal of Fuck You money among the wealthy.
You can’t move – Once you are there, you’re there. If a really crappy neighbor, karaoke bar or rooster farm moves next door, there’s not much you can do. Renters can at least move – homeowners here can’t. That is why we will eventually be getting a HUGE lot and start with a smaller residence. They say that fences make for good neighbors. In the Philippines, having the house next door a half-mile away makes for even better neighbors.
PROPERTY OWNERSHIP ‘LOOPHOLES’
Corporations: As mentioned earlier, a Westerner can purchase land in the Philippines by setting up a Philippine corporation. The caveat is that the corporation must be at least 60 percent Filipino owned; that is, the majority stock holders all have to be Philippine citizens. And although this sounds like a great way to work ‘within’ the law in acquiring a parcel of Philippine soil, there are two major problems. First, one must consider the possibility of your Filipino board members suddenly deciding it’s time to liquidate some of their holdings (i.e., your house) in order to raise capital. The second issue is the Philippines Anti-Dummy Law which is targeted towards foreigners who have created a corporation solely for the purposes of acquiring Philippine land and/or property. So, if a judge determines that the corporation was created in order to circumvent Philippine land ownership laws, any such purchased properties become forfeit.
Leasing: The second option for owning land (albeit temporarily) in the Philippines is by leasing it. Philippine law allows for a foreigner to enter into a long-term lease on a property. The Investor’s Lease Act allows for a foreigner to lease land for up to 25 years with the option to renew for an additional 25 years. Once the land is leased, the lessor is allowed to build a house on the land – with the understanding that he owns just the buildings and not the actual land itself.
BUYING A CONDOMINIUM IN THE PHILIPPINES
Although foreigners are legally barred from owning land in the Philippines, non-Filipino citizens are allowed to purchase condominiums; the logic being that they own unit itself and not the actual land on which it was built. Condominium construction in the Philippines is BIG business and to fully appreciate the size of the industry here, all one has to do is take a gander at the skylines of Manila and Cebu, both of whose horizons are dominated by towering condo units. Some of these are completed developments while others are still in the building process (noted by the massive cranes operating atop the buildings)
Condo Ownership Pros
The deed is in your name and the unit is truly yours – Typically, each condominium construction is allowed to sell a certain percentage of its units to foreigners.
Usually located centrally in urban areas – You won’t find condominiums in the province. I am not a big fan of cities (especially here), but they do provide easy access to nightlife, malls and restaurants.
Some have gyms, pools and the like – Actually, nearly every condo construction I have seen has its own gyms and at least one pool. Many even have their own malls, usually incorporated into a tenant parking garage.
Usually more secure – All condominiums have security staff on site. And seeing as your unit’s windows are a few hundred feet off the ground, you don’t have to worry too much about opportunistic burglars.
Western styling – The big builders in the Philippines are keen on Western styling in their units. You won’t find too much in the way of gaudy pastel paints or dirty kitchens. They will also usually have more energy efficient sliding windows (as opposed to jalousie windows), grounded electrical circuits, dedicated showering areas, larger bedrooms, and the like.
Nice views – Being a hundred plus feet in the sky makes for nice breezes and pretty vistas. You’re also usually high enough not to see all the trash littering the streets or breathe in the lingering exhaust smog from the roads below.
Backup power generation – Every condo I have visited has backup generators. Keep in mind, though, that due to supply limitations, most of them only provide power to one outlet in the condo. Most of these also don’t allow you to use the aircon while the power is out.
Owners Association – People aren’t big on Home Owners Associations, but they do go a long way in keeping the complex clean and (modestly) maintained.
Condo Ownership Cons
High Costs/Limited Space – Philippine condos are very small. Sure, you can get a 100 square meter condo unit in the Philippnes, but it is going to be stupid expensive. Most condos for sale are typically 30-40 square meters – and they somehow squeeze 2 bedrooms into that space.
Fire Risks – Keep in mind that fire engine ladders can only usually extend to the 8th floor.
Earthquake worries – This one is usually slept on, but whenever I am zipping around a big city in a Taxi, I can’t help but look at the soaring condo complexes and wonder how they would handle a 7.0+ earthquake. I mean, the towers are quite wide, but they are not very ‘deep.’ For me, that is a big nope. I Then again, I don’t stay in multistory hotels that much for the same reason.
Owners Association drama – While having a HOA to monitor cleanliness and maintenance, can be good thing, there are downsides to owner associations. I am not going to renumerate all of them, but conflict between owners and HOA’s do exist. Add to that the political struggles inherent to any such administration and Filipino love of intrigue, drama and power struggles, and Owner’s Associations can become a problem you can’t move away from.
Can be difficult to sell – As with homes, condos are a hard sell in the Philippines. The country has gone through a building boom over the last decade which has resulted in a multitude of new condo complexes and a good number of unsold/unrented units. As noted, condos here are VERY expensive and new buyers are usually looking towards purchasing brand new units in higher end developments. In my experience with condo owners, nearly all who had to sell their units sold at a marked loss.
Maintenance and upkeep can be an issue – If you don’t have a competent Owner’s Association (or you have a sketchy developer), basic upkeep on the development as a whole becomes a problem. I have been to a few complexes in Cebu that looking more like housing projects in the USA. Not good.
Many are rented so neighbors can change for the worse – Not only this, but in the day or AirBnB, you might find yourself bracketed by absentee landlords renting out their units online. Having a constantly changing cast of characters wondering the hallways of your unit is unnerving and/or annoying.
Most are constructed within the congested city limits – My final gripe with condos is that they are all in the city. And as with any city in a developing nation, it’s going to be surrounded with congested streets, trash and a general lack of sidewalks. I am not a big fan of cities in the Philippines, so for me, this is a big nope.
BUILDING YOUR DREAM HOME
At some point, building (or buying) a home in the Philippines typically becomes a part of one’s Philippine Dream. With low labor costs and the availability of building materials (concrete), you can build a very nice house for about one-quarter of what it would cost in the West. And although undertaking such a project brings with a host of worries (some of which we will examine below), a good number of foreigners eventually end up building or buying homes. Remember though, that there are more than a few caveats associated with such an undertaking.
IT’S NEVER ‘YOURS’
The number one issue facing homebuilders (or buyers) is the fact that foreigners cannot own land in the Philippines. It’s literally the law. The property will never be in your name, so it won’t be yours. The only real option is putting the property in your wife or girlfriend’s name. And by doing that, you are basically forfeiting all rights to the lot and – in many cases – the house.
Most Dreamers want to believe that their relationship is special and that it will endure the Test of Time. (As discussed previously the ‘She’s Different’ section.) In reality, however, a number of relationships don’t work out and some foreigners can do nothing but watch as the property and home they spent tens (or hundreds) of thousands of dollars on slips through their fingers. Despite our best hopes, relationships change over time – sometimes for the better, sometimes for the worst. And if it’s the latter, a foreigner will be at a massive disadvantage when it comes to homes and properties in the Philippines.
LOSS OF LEVERAGE
It’s not a pleasant topic, but it’s also one that we have to acknowledge. Many foreigners in the Philippines benefit from a huge amount of financial leverage in the Philippines, especially when it comes to relationships. Believe it or not, beautiful young Filipinas aren’t always in relationships with much older, markedly less attractive Westerners just because of their milky white skin and long noses; the financial security offered by the foreigner’s bank account usually plays a role. With one individual in the relationship having all the money and the other having none, the dynamic here is markedly different than a conventional relationship in the West. In the Philippines, such relationships are of a more transactional nature – the woman gets a more comfortable and stable life (for her and any of their children) and the man benefits from the companionship of a younger and decidedly more attractive partner. As to the levels of love and affection in these relationships, who can really tell – each relationship is different and such things are difficult to quantify.
How does this apply to the topic at hand? It’s simple: Once a foreigner purchases a property or home in their spouse’s (or partner’s) name, the dynamic suddenly shifts – the man suddenly isn’t holding all of the cards and the relationship is on more even footing.
Now, for some, this isn’t a problem. Egalitarianism isn’t such a horrible thing after all. For others, however – like those cheating on their wives or abusing them – it’s not so great. For now, the Filipina actually has something tangible (financial resource) and no longer has to put up with the foreigner’s indiscretions. And where once there were arguments and fights over infidelities, there’s now the very real possibility of the police showing up to escort the foreigner off of his partner’s property. Or – secure that she now has a financial base to work from – she might hire a private investigator, gather proof of his shenanigans and blackmail him into leaving the country or face criminal charges and/or deportation (adultery carries a 2–6 year prison sentence in the Philippines). While rare, these things do happen. In my 12 years, I have seen it happen to three foreigners that I knew.
INHERITANCE
What with the ubiquitous age differences, many foreigners will probably “pre-decease” their Filipina spouse. If by some fluke that doesn’t happen and the Filipina passes away first, there is some question as to what happens to the ownership of the home. In most cases, the property and home are in her name, and the title will pass on to her Filipino heirs. If – however –the purchase agreement has your name on it, and it notes that you provided the funds for its construction/acquisition, Philippine law allows you to remain in the home for “a reasonable amount of time” while the property is up for sale. This period of time isn’t set in stone, however, and much discretion is given to the courts.
More commonly, though, the foreigner will die before his younger Filipina spouse. In this case, the home and property are now fully hers and – equally important– her family’s. If you haven’t provided something in the way of financial support, or if the both of you haven’t spent enough time in the West to pass on Social Security (or similar) benefits, the property and home are now a gift to the woman that you are leaving behind.
TITLES
Property titles in the Philippines are oftentimes a convoluted mess. Aside from a lack of accurate surveying, any particular property title can have numerous claims upon it – some declared in writing on the deed, others not showing up until months or years later. Land is the Philippines is usually passed down to younger family members, and given the size of some Filipino families, you can have up to a dozen people laying claim to any one title. In these cases, you need written acknowledgement (lubricated with Filipino ‘motivation’) from all inheritors that they disavow any claim to the land. Due diligence, a good lawyer and a great deal of research have to be done before any title can be transferred. Squatters are another issue. If families have been unlawfully residing on your purchased property, you are most likely going to be responsible for paying them to move off of your (her) land. Deeds and titles are a complicated subject, encompassing guaranteed, government backed quit-claim deeds. And since the law is always changing, a knowledgeable real estate attorney is the first (and final) step of any land purchase in the Philippines.
CONCLUSION
In summation, one would be advised to put a great deal of thought into what they are willing to do (or lose) when it comes to buying property in the Philippines. One of this book’s original authors had his home and land under his wife’s name, but they had also been together here for over twenty-five years. As for myself and the book’s other author, we’ve been happy just renting. (Though for me, we are now in the buying/building phase.) And although you’ll never be able to really customize a rental to your particular wants and whims, renting is very inexpensive and it also gives the option to not renew a future lease in order to check out other options – or islands, for that matter.
++ So that’s it for this installment. If you are looking for a more concise/less fragmented version, buy the complete ebook for (a wopping) $6.95 by clicking HERE. Note that it is in epub format, so you will need an appropriate e-reader app (or Kindle) to read it. ++
