• How to Buy Land in the Philippines: The Ultimate Guide

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    The Philippines attracts plenty of foreign retirees and travelers that got an appetite for its warm climate, high quality of life, and low living costs.

    The country comprises thousands of islands and is the home of some of the most magnificent natural sceneries and animal wild-life in the world. Another benefit of living in the Philippines is that you won’t have any issues communicating in English.

    Besides, the country offers several long-term visas that can be obtained comparatively easily. I also want to highlight that the Philippines always rank high in our annual property index.

    Due to its attractiveness, it’s not strange why individuals and corporations alike want to buy land in the Philippines. Might it be a land plot to build a private home or a vast space of beachfront land to develop hotels.

    Buying land in the Philippines is complex though, especially if you try to navigate the market as a foreigner. Not only do you have to deal with regulations to foreign land ownership, but limited information about prices and the buying process.

    In this article, we cover the following topics:

    • Can foreigners buy land in the Philippines?
    • Buying Land Through a Company
    • The Process for Land Acquisitions
    • General Advice When Buying Land
    • Land Prices in the Philippines
    • Taxes
    • How to Find Land for Sale

    Can foreigners buy land in the Philippines?

    As mentioned in my separate article about where foreigners can buy land in Asia, Malaysia, Japan, and Korea are basically the only options you have for land purchases.

    Sentosa Cove in Singapore also allows foreign land ownership, but costs are abnormous and you often have to come up with tens of millions of Singapore dollars to get hold of land plots.

    In the Philippines, regulations are similar to that of Thailand, Vietnam, and Cambodia as foreign individuals can only get hold of condominium units.

    These can be bought on a freehold basis with an exception for Vietnam where foreigners can only get hold of leasehold contracts.

    Bear in mind that even if foreigners can buy condominium units in these countries, there’s a limit set to the number of units that have to be owned by local citizens. The ratio is currently as follows:

    • Cambodia: 70%
    • Thailand: 49%
    • The Philippines: 40%
    • Vietnam: 30%

    As mentioned, the only option foreign individuals have is to lease land with a leasehold period of up to 50 years and that is sometimes renewable for another 25 years.

    Buying Land Through a Company

    To get hold of land in the Philippines, you have to acquire the land either by having a spouse from the Philippines or through a company.

    Keep in mind that in order for the Board of Investment (BOI) to grant and recognize the purchase, 60% of the company shares have to be allocated for Filipino citizens.

    This is sometimes resolved through contractual setups which give you a majority of the voting rights and full control of the company.

    This is not as straight-forward as it sounds in most instances and should be thoroughly discussed with a local lawyer.

    As a foreigner, you can only own 1,000 square meters (0.25 acres) of urban land and around 2.5 acres of rural land. It’s important that you work with a credible local lawyer that can help you to check the title deed and draft a waterproof contract.

    The buying process is infamous for being complex due to the regulations imposed by the government, such as the Anti-Dummy Law.

    The Process for Land Acquisitions

    The legal process is as follows when foreigners buy land in the Philippines. Keep in mind that some important steps, such as the consultation with lawyers, have not been included.

    • You agree on the purchase with the seller and the lawyer helps you to create and notarize the Deed of Absolute Sale (DOAS)
    • Contact the Bureau of Internal Revenue (BIR) and request a Land Tax Declaration. The document should be submitted to the Assessor’s Office in your municipality or city
    • You pay the real estate tax to the City Treasurer’s Office
    • The value of the unit is confirmed by the Assessor’s Office
    • You pay the transfer taxes to the Assessor’s Office, in accordance with the values appreciated
    • The Documentary Stamp Tax and Capital Gains Tax are paid to the Bureau of Internal Revenue (BIR)
    • A new title should be issued and the old one canceled by the Registry of Deeds (RD)
    • You get a photocopy of the new title deed. Besides, you should contact the Assessor’s Office to ask for a tax declaration

    General Advice When Buying Land

    Before you can find some important and general advice when buying land as a foreigner in the Philippines. Keep in mind that these are just some examples and you should add items to the list.

    • The further away you get from the capital, the more cautious you have to be
    • Titled property is by far the best that you can find. A certified copy of the title, tax map, tax declaration, and other verified documents should be received
    • There should not be any liens or encumbrances to the property and the record should be clean
    • If there are any mortgages or encumbrances on the property, these should be canceled

    Land Prices in the Philippines

    We’ve seen the biggest price gains in Makati, the Central Business District of Manila. The average land price here is now around PHP 433,750 (USD 8,675).

    The prices have also increased much in Fort Bonifacio and Taguig with prices ranging from PHP 273,000 to PHP 500,000 (USD 5,460 to USD 10,000).

    Looking at the highest appreciations in terms of percent, Ortigas Center has seen the highest increases with prices now averaging at around PHP 161,500 (USD 3,230), according to Lamudi Philippines.

    These cities along with other parts of Metro Manila like Muntinlupa, Paranaque, and Quezon City will see price increases of around 6% to 12% in the coming years.

    To give you a better overview, I have included some examples with land plots for sale below.

    Manila, Metro Manila

    • Location: Ermita Manila, near Ayala Bridge
    • Type: Commercial land plot
    • Size: 602.3 sq.m.
    • Price: PHP 60 million (USD 1.2 million)
    • Price per sq.m.: PHP 99,618 (around USD 1,992)

    Manila, Metro Manila

    • Location: M.H. Del Pilar, Malate
    • Type: Vacant commercial land plot
    • Size: 1,033 sq.m.
    • Price: PHP 361.55 million (USD 7,231,000)
    • Price per sq.m.: PHP 350,000 (around USD 7,000)

    Monterrazas, Cebu

    • Type: Residential lot
    • Size: 752 sq.m.
    • Price: PHP 21.056 million (USD 421,120)
    • Price per sq.m.: PHP 28,000 (around USD 560)

    Taxes

    You have to pay the following taxes when buying and selling land in the Philippines.

    Notary Fee

    The buyer generally pays a notary fee which is 1% to 2% of the zonal value or the total real estate value, whichever is the highest.

    Transfer Tax

    Buyers also have to pay for the transfer tax which is set to 0.50% to 0.75%. Again, the rate is multiplied by the zonal value or the sales value, whatever is higher.

    Registration Fee

    A registration fee of the land is paid by the buyer where the rate is 1% and multiplied by the zonal value or the sales value.

    Documentary Stamp Tax

    A documentary stamp tax also referred to as documentary stamp duty, is paid and 1.5%, multiplied by the sales value or zonal value.

    Capital Gains Tax

    A capital gains tax of 6% is generally paid by the seller, but sometimes included in the sales price and born by the buyer. Thus, the capital gains tax can be paid by either the seller, buyer, or both. It depends on what you and the seller agree on.

    Real Estate Agent´s Fee

    Agents’ fees are generally lower for large real estate transactions and where the buyer’s representative can get 1%, while the seller’s representative gets 1%. Thus, the rate fluctuates and it’s not fixed.

    With that said, the rate is significantly lower for large and commercial transactions compared to residential units.

    How can I find land for sales?

    It’s not always easy to find good land for sale and buyers sometimes try to scroll through listings that are sometimes not updated or with limited information about the land.

    As mentioned, the costs for acquisitions of land can be exceptionally high, especially if you plan to develop a large land plot for commercial purposes.

    A preferable choice can therefore be to work with a local partner that presents multiple choices at a time and don’t try to sell a specific listing. This might result in a situation where the agent is biased and doesn’t serve your best needs.

    If you’re interested in investing in land in the Philippines and need help, feel free to send us a message through the form below and then we will come back earliest possible.

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