Buying real estate in the Philippines as a foreigner?

We've created a guide to help you avoid pitfalls, save time, and make the best long-term investment possible.

Buying property in The Philippines as a foreigner: a full guide

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buying property foreigner The Philippines

Everything you need to know is included in our The Philippines Property Pack

The Philippines is a top pick for foreigners who want to invest in real estate. It offers breathtaking scenery, a rich culture, and friendly locals.

Nevertheless, purchasing property in a foreign country can be complicated, especially with all the laws and regulations involved.

Fear not! This guide is here to make it simple for foreign buyers to comprehend how the property market functions in The Philippines. We'll go over everything you need to know in a straightforward and easy-to-understand manner.

Also, for a more in-depth analysis, you can check our property pack for the Philippines.

Can you purchase and own a property in the Philippines as a foreigner?

If you are American, we have a dedicated blog post regarding the property buying and owning process in the Philippines for US citizens.

When considering buying real estate in the Philippines as a foreigner, there are specific regulations and limitations you should be aware of.

Understanding these can help you navigate the process smoothly.

Firstly, foreigners are not allowed to own land in the Philippines. This is a significant distinction from local citizens, who have the right to land ownership.

However, there are ways for foreigners to indirectly own land, such as through a corporation. A foreigner can own up to 40% of a corporation, and the corporation can own land. This is a common workaround used by many foreign investors.

Despite this restriction on land ownership, foreigners have more freedom when it comes to owning condominium units or buildings.

You can fully own a condominium unit as long as foreign ownership in the condominium corporation does not exceed 40%. This is a popular option for many foreigners looking to invest in Philippine real estate.

There are no specific rules that differentiate real estate rights based on your country of origin. The laws apply uniformly to all foreigners, regardless of their nationality.

This means that whether you're from the United States, Europe, or any other region, the same rules regarding ownership restrictions and opportunities apply.

Residency is not a prerequisite for buying property in the Philippines. You can purchase real estate even if you do not live in the country. This flexibility makes it easier for foreign investors and those looking for holiday homes to invest in Philippine real estate.

Regarding visas and permits, there is no specific visa or permit required solely for the purpose of buying property.

However, if you plan to stay in the Philippines for a prolonged period, you will need to comply with the country's immigration laws and obtain the appropriate visa.

There are no government authorizations needed specifically for the purchase of property by foreigners, but standard property buying procedures apply. This includes due diligence checks, payment of taxes, and registration of property.

The Philippines does not enforce a minimum investment requirement for foreigners buying property.

However, the investment value might affect other aspects, such as eligibility for certain types of visas, for example, a retirement visa, which might have its own investment thresholds.

Can you become a resident in the Philippines by purchasing and owning a property?

In the Philippines, there is indeed a program that allows foreigners to gain residency through real estate investment, known as the Special Resident Retiree's Visa (SRRV).

This program is designed to attract foreign retirees and investors by offering them a path to residency in exchange for investing in the country's real estate market. Here's a detailed look into how this program works.

The SRRV program is open to foreigners, regardless of age, who meet certain investment requirements. The minimal investment amount varies depending on your age and the type of SRRV you apply for.

Generally, the younger you are, the higher the investment requirement. For instance, for those under 50, the investment is typically higher compared to those over 50. These investments can be in the form of a deposit in a Philippine bank or an investment in real estate.

The requirements for the SRRV include the investment, a valid passport, and proof of the required pension or income, among other documents.

It's essential to ensure that all your documents are in order and comply with the Philippine Bureau of Immigration's guidelines.

As for how many people have used this scheme, the number varies year by year. The program has been popular among retirees and investors from various countries, attracted by the Philippines' climate, lifestyle, and the benefits of the SRRV program.

The residency as long as you wish without the need to renew your visa regularly, as long as the investment granted under the SRRV is indefinite as long as you maintain the investment.

However, it's important to note that this does not automatically lead to permanent residency or citizenship. The SRRV is essentially a long-term residency visa.

While the SRRV does not directly provide a path to citizenship, being a long-term resident can be advantageous if you eventually decide to apply for citizenship.

The process for applying for citizenship would be separate and would typically require you to meet additional criteria, such as a certain number of years of residency, language proficiency, and an understanding of Filipino culture and history.

Thinking of buying real estate in the Philippines?

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buying property foreigner The Philippines

Market indicators

You can find fresh and updated data in our pack of documents related to the real estate market in the Philippines.

By examining the the the GDP per capita indicator, we can deduct that Filipino people have become 2.6% richer in the past 5 years.

As people's wealth increases, their interest in real estate also grows, and that can make prices increase down the road.

Looking at the data reported by Numbeo, we can see that residential properties in the Philippines offer yields between 1.6% and 4.3%.

These values for rental yields can be considered as "moderate", which means they fall within a reasonable range and are neither exceptionally high nor exceptionally low.

To know more, you can also read our dedicated article: is it a good time to buy a property in the Philippines?

Daily life of an expat

Living as an expat in the Philippines offers a unique and vibrant experience.

The country boasts stunning natural landscapes, warm tropical weather, and a rich cultural heritage.

As an expat, you'll have the opportunity to immerse yourself in a friendly and welcoming community.

One of the highlights of expat life in the Philippines is the affordable cost of living. Housing, food, transportation, and entertainment are generally more affordable compared to many Western countries.

The Filipinos are known for their hospitality and kindness, making it easy to forge friendships and build a support network. The English proficiency of the locals is generally high, which eases communication for expats who may not speak the local languages.

The Philippines also offers a wide range of activities and attractions. From exploring pristine beaches and lush mountains to diving in world-renowned dive sites and indulging in delicious cuisine, there's something for everyone.

However, it's important to note that the Philippines, like any other country, has its own set of challenges.

Traffic congestion, occasional power outages, and language barriers in rural areas can be encountered. Additionally, adapting to the tropical climate and adjusting to cultural differences may take some time.

Overall, the life of an expat in the Philippines can be fulfilling, exciting, and rewarding. It offers a chance to embrace a different way of life, explore new adventures, and create lasting memories in a country renowned for its natural beauty and warm-hearted people.

What are the best places to invest in real estate in the Philippines?

This table summarizes some of the best places to buy a property in the Philippines.

City / Region Population Average Price per sqm (PHP) Strengths
Metro Manila ≈ 13 million 100,000 - 200,000 Capital region, business center, cultural attractions, entertainment options
Cebu City ≈ 950,000 50,000 - 100,000 Second-largest city, economic hub, historic sites, vibrant nightlife
Davao City ≈ 1.6 million 40,000 - 80,000 Urban growth center, safe city, natural beauty, Mount Apo
Boracay ≈ 32,000 80,000 - 150,000 Tropical island paradise, white sandy beaches, water sports
Baguio City ≈ 360,000 40,000 - 80,000 Cool climate, mountain resort, scenic views, strawberry farms
Tagaytay City ≈ 80,000 50,000 - 100,000 Cool climate, scenic landscapes, Taal Volcano, retreat destination
Iloilo City ≈ 450,000 30,000 - 60,000 Emerging business center, historic city, food destinations

Do you need a lawyer to buy real estate in the Philippines?

When purchasing a property in the Philippines, engaging a local lawyer can provide valuable assistance in navigating the legal aspects and ensuring a successful transaction.

One crucial document they can help you with is the Deed of Absolute Sale, a legally binding contract between the buyer and seller that outlines the terms and conditions of the sale.

The Filipino lawyer can also assist with conducting a Property Title Search to verify the property's ownership status and identify any potential legal issues or encumbrances.

Additionally, they can guide you through the process of obtaining necessary permits and approvals, such as approval from the local Land Registration Authority or relevant authorities.

They will ensure that all applicable taxes and fees, such as the Documentary Stamp Tax and Transfer Tax, are paid correctly and in compliance with Philippine laws and regulations.

What are the risks when purchasing a property in the Philippines?

We've got an article dedicated to the risks associated with purchasing property in the Philippines.

The risks when buying a property in The Philippines are mainly related to the legal system.

The Philippines has a complex system of land registration, which can make it difficult to verify the title of a property. This can lead to potential buyers being exposed to fraud or having their ownership rights challenged in court. Additionally, the Philippines has a long history of political instability, which can increase the risk of property being seized or confiscated. Finally, the Philippines has a high rate of natural disasters, such as typhoons and earthquakes, which can cause significant damage to property.

real estate The Philippines

Everything you need to know is included in our Philippines Property Pack

What are the required documents for a real estate transaction in the Philippines?

The documents needed when buying a property in the Philippines depend on the type of property and the type of purchase. Generally, the following documents are required:

1. A copy of the Deed of Sale or Contract to Sell, which should be notarized. 2. A copy of the Transfer Certificate of Title (TCT) or Original Certificate of Title (OCT). 3. A copy of the Tax Declaration for the property. 4. A copy of the Tax Clearance Certificate issued by the Bureau of Internal Revenue. 5. A copy of the Zoning Clearance Certificate from the local government. 6. A copy of the approved subdivision plan or condominium plan. 7. A copy of the approved building plans. 8. A copy of the certificate of occupancy. 9. A copy of the Real Estate Tax Receipt. 10. A copy of the Official Receipt for the payment of the Real Estate Tax. 11. A copy of the approved Environmental Compliance Certificate (ECC) issued by the Department of Environment and Natural Resources (DENR). 12. A copy of the Authority to Sell issued by the Housing and Land Use Regulatory Board (HLURB).

We review each of these documents and tell you how to use them in our property pack for the Philippines.

What strategies can you use for successful negotiations with Filipinos?

Here is a list of recommendations when you negotiate a property deal with a local in the Philippines:

  1. Respect and politeness: Show utmost respect and politeness when negotiating with locals in the Philippines. Greet the seller with a warm smile and use polite language throughout the negotiation process.
  2. Pakikisama (Harmonious relationships): Embrace the value of pakikisama, which emphasizes maintaining harmonious relationships. Foster a friendly and cooperative atmosphere during negotiations by being accommodating, understanding, and respectful.
  3. Indirect communication: Filipinos often prefer indirect communication to preserve harmony. Pay attention to non-verbal cues and subtle hints during negotiations. Avoid being overly direct or confrontational.
  4. Show interest in the seller: Take the time to inquire about the seller's family, interests, and background. Showing genuine interest helps build rapport and trust, which can positively influence the negotiation process.
  5. Hiya (Sense of shame) and pakiusap (Humble request): Be mindful of not putting the seller in an uncomfortable position. Practice humility and make requests politely to maintain a respectful negotiation environment.
  6. Patience and flexibility: Negotiations may involve multiple rounds and require flexibility. Exercise patience, and be open to considering alternative options or compromises in line with Filipino customs.
  7. Consider hiring a mediator: If faced with challenges during negotiations, consider engaging a mediator who understands Filipino culture. They can help bridge any cultural gaps and facilitate a successful outcome.
  8. Celebrate and express appreciation: After successfully negotiating the property purchase, consider hosting a small celebration or offering a gesture of gratitude. This act of appreciation strengthens the relationship with the seller.

Are bank loans available to foreign nationals in the Philippines?

Foreigners are generally allowed to obtain property loans in the Philippines, subject to certain conditions and requirements.

If you are a foreigner looking to obtain a property loan in the Philippines, you may consider financing options through the Home Development Mutual Fund (Pag-IBIG Fund), which offers affordable housing loans for eligible members, including overseas Filipino workers.

BDO Unibank, Metrobank, and Bank of the Philippine Islands (BPI) are among the Philippine banks that have the potential to offer mortgages to non-resident individuals.

In The Philippines, mortgage rates for a 20-year term range between 5% and 9%, which are within the average range.

What are the taxes related to a property transaction in the Philippines?

Here is a breakdown of taxes related to a property transaction in the Philippines.

Tax Description Calculation Who pays
Transfer Tax Tax on the transfer of property 0.5% for properties located in provinces and 0.75% in cities and municipalities of Manila Buyer
Stamp Duty Tax on various legal and administrative documents Around 1.5% of the property sale price or market value, whichever higher Seller
Capital Gains Tax Tax on the profit from property sale 6% of the property gross selling price or market value, whichever is higher Seller
Value Added Tax (VAT) Tax on the sale of new or transfer of developed real estate 12% of the property selling price Buyer

What fees are involved in a property transaction in the Philippines?

Below is a simple breakdown of fees for a property transaction in the Philippines.

Fee Description Calculation Who pays
Notary Fee Fees charged by the notary for handling the property transfer Generally around 1% to 2% of the property value Buyer
Real Estate Agent Fee Commission paid to the real estate agent involved in the transaction Varies between 3% and 5% of the property sale price Seller
Registration Fee Fees for registering the property transfer 1% of the property value Buyer

Buying real estate in the Philippines can be risky

An increasing number of foreign investors are showing interest in the Philippines. However, 90% of them will make mistakes. Avoid the pitfalls with our comprehensive guide.

buying property foreigner The Philippines