In the Philippines, the relationship between landlords and tenants is primarily governed by Republic Act No. 9653, also known as the Rent Control Act of 2009. This legislation serves as a protective measure to ensure that housing remains affordable for lower-income brackets by strictly regulating how much and how often a landlord can increase the rent.
1. Scope and Coverage
The Rent Control Act does not apply to all rental properties. For a unit to be covered by the limitations on rent increases, it must meet specific criteria regarding the monthly rental amount and the location.
- Residential Units: The law applies to apartments, houses and/or lots, building districts, and even boarding houses or dormitories used for residential purposes.
- Rental Threshold: Currently, the law covers residential units in the National Capital Region (NCR) and other highly urbanized cities with a monthly rent of PHP 10,000 and below.
- Other Areas: For all other areas in the Philippines, the law covers units with a monthly rent of PHP 5,000 and below.
Note: Units with rent exceeding these amounts are governed by the general provisions of the Civil Code of the Philippines, meaning the rent increase is generally subject to the mutual agreement of both parties (the "Freedom of Contract").
2. The Maximum Allowed Increase
The law does not set a permanent, fixed percentage for all time. Instead, it grants the Department of Human Settlements and Urban Development (DHSUD)—formerly the Housing and Urban Development Coordinating Council (HUDCC)—the authority to set the annual increase cap.
Based on recent resolutions and the extension of the Rent Control Act, the standard limitations are typically structured as follows:
| Monthly Rent Amount | Maximum Allowable Annual Increase |
|---|---|
| PHP 1 to PHP 4,999 | Up to 4% per year |
| PHP 5,000 to PHP 8,999 | Up to 7% per year |
| PHP 9,000 to PHP 10,000 | Up to 11% per year |
These rates are subject to change based on the periodic review of the DHSUD. It is important to check the current year’s specific Resolution for any adjustments.
3. Frequency and Conditions of Increase
A landlord cannot increase the rent multiple times within a single year. Under the Act:
- Annual Limit: Rent may only be increased once a year.
- New Tenants: When a unit becomes vacant and a new tenant moves in, the landlord is generally permitted to set a new initial rent based on the current market value. However, once that new lease begins, the annual percentage caps apply again.
4. Prohibited Acts and Penalties
The Rent Control Act is "pro-tenant" in its enforcement. Landlords are strictly prohibited from:
- Demanding Excessive Increases: Any increase beyond the percentage set by the DHSUD is illegal.
- Excessive Deposits/Advance Rent: Landlords may only demand a maximum of one (1) month advance rent and two (2) months security deposit. Any interest earned on the deposit must be returned to the tenant or used for repairs.
- Arbitrary Ejectment: A landlord cannot evict a tenant simply because they refuse to pay an illegal rent increase. Valid grounds for ejectment are specific (e.g., non-payment of rent for three months, subleasing without consent, or the need of the owner to repossess for personal use).
5. Legal Recourse
If a landlord imposes an increase that violates R.A. 9653, tenants have the right to seek assistance.
- Barangay Conciliation: Most disputes must first pass through the Lupong Tagapamayapa for mediation.
- DHSUD/Courts: If mediation fails, a formal complaint can be filed. Violators may face fines ranging from PHP 25,000 to PHP 50,000 or imprisonment of one month and one day up to six months, or both.
6. Summary of Key Constraints
To remain compliant with Philippine law, landlords must remember that affordability is the legislative priority. If a unit falls under the PHP 10,000 (NCR) or PHP 5,000 (Provincial) threshold, the landlord's "freedom to contract" is superseded by the state's police power to regulate prices for the common good. Stay updated with the latest DHSUD Resolutions to ensure the exact percentage applied is current.