Land Acquisition in the Philippines

By law, foreigners do not have the right for land acquisition in the Philippines. However, there is possibility for long-term land ownership. This is why the coastline of Philippines is found attractive by expatriates as well as it draws in foreign natives as a best-selling retirement destination.

How can you purchase condominiums and what are the exceptions for land acquisition in the Philippines? In this blog post you will find most vital guidance on land ownership in the Philippines for foreigners.

Land Acquisition in the Philippines

Foreigners can become landowners in the Philippines in two terms:

• In case they are former Filipino citizens
• If they have inherited land

Let’s say a corporation plans on becoming a landowner, then a Philippines citizen must own at least 60% of their capital. Therefore prior to going ahead with any partnerships you are planning, proceed from the fact that at least 60% of the shares must be owned by locals for you to legally own or acquire land.

Exceptions

While the general term is to guarantee 60% Filipino ownership on land acquisition deals, there are exceptions. Some of these also affect foreigners looking into land deals in the Philippines:

• Land has been acquired before the 1935 constitution
• Acquisition through hereditary succession for legal or natural heir foreigners
• Purchase of less than 40% interest in a condominium project
• Purchase by a former Filipino citizen must follow the lawful limitations. May own up to 1000 square metres of residential land and 1 hectare of agricultural or farm land
• Marriage between Filipino and a foreigner – if a local marries a foreign national and has remained their Filipino citizenship

Photo by James Connolly on Unsplash

Real Estate Law in the Philippines

Frankly for foreign buyers, the utmost restriction for acquisition comes from the real estate law. It prohibits foreign ownership on land. Firstly, there can only be limited amount of foreign nationals on the Board of Directors (BOD) of your landholding company. It is limited to 40% of foreign participation.

Secondly you must consider that in case of any breaching of the law, you are also risking forfeiture of the property. This means that state has the right to confiscate your assets.

Avoid bending or disobeying the law as it will not pay off further down the line and you may lose your dream home in the Philippines all together. Plus, there are perfectly legitimate ways of acquisition you should concentrate on.

Opportunities for Long Term Land Acquisition

While land acquisition is under high regulations in the Philippines, there are more solutions for staying in the country for long term. Foreign nationals may purchase both on their own:

• Condominiums
• Buildings

The third land acquisition option for a foreigner is long-term land lease.

Condominium Act in the Philippines

The concept of condominium ownership is not familiar to westerners. Buying a condominium unit is one of the most suitable forms of land acquisition for a foreigner. However, as per the Philippine Condominium Act, you must also follow the government regulation where 60% of the units have Filipino ownership.

The act is about allowing foreigners to acquire condominium units and shares in condominium corporations. Based on the regulation, it allows you to acquire not more than 40% of the total and outstanding capital stock of a local-owned or controlled condominium corporation.

The condominium project will not be fully foreign-owned, though you are able to buy it and be a legitimate long-term owner of the property. This is one of the ways foreigners can choose their retirement homes in the Philippines and how some long-time expatriates choose to settle in. Also, many use condominiums for earning profit from third party rental fees.

If you are settling in as an expatriate in the Philippines, make sure to read our recent article about applying for a Philippines Business Visa.

Lease Agreements in the Philippines

For many foreigners, signing a lease agreement is the best case scenario. They wish a stable home in the Philippines yet either lack of funds to invest or do not meet the criteria. Note that lease agreements offer you a long-term solution and stability.

Foreign individuals, associations and corporations can lease land for a period of 25 years. This period is renewable for 25 more years.

If you are investing in the Philippines, you are up for receiving government’s permission for a longer term lease period. This is covered by the Investor’s Lease Act of the Philippines. It allows foreign companies or individuals to enter into lease agreements with Filipino landowners. Note that you can enter into lease agreements with local landowners initially for up to 50 years period. They are renewable once for an additional 25 years.

Do not hesitate to get in touch with us – Emerhub will advise you further on land acquisition in the Philippines and provide necessary support with drafting agreements.