List of Licensed Real Estate Developers

BY ALBERT CASTRO

HOUSING units are becoming more affordable to buyers as recent government initiatives are made to address developers’ and buyers’ needs.

For one, the price cap on the housing unit exempt from value-added tax (VAT) coverage may soon be increased by the Bureau of Internal Revenue (BIR) to P3 million from the present P2.5 million.

Earlier, the National Home Development Mutual Fund (Pag-IBIG) said it was working out a scheme to provide housing units to lower-paid workforce like maids, drivers, and security guards, as a way of channelling tax savings to marginalized contributing members.

Nelson M. Aspe, deputy commissioner of the BIR, said the agency has forwarded the recommendation for the increase of VAT cap to the Department of Finance for approval, with the new rule probably taking effect before the end of the year.

"We took a study on the matter. And since prices are now higher than before, the cap also needs to be inflation-adjusted among others," said Aspe.

"Besides, developers are also asking for it," he added.

The VAT cap is stipulated in the expanded VAT law, Republic Act 9337, which provides exemption to real properties not primarily held for sale to customers or held for lease in the ordinary course of trade or business, among others.

The law also stipulates that low-cost and socialized housing are to be exempt from VAT, as well as residential lots and house and lots valued at P1.5 million, and other residential dwellings valued at P2.5 million and below.

The same law provides that "not later than Jan. 31, 2009 and every three years thereafter," the cap has to be adjusted "to their present values using the Consumer Price Index, as published by the National Statistics Office (NSO)."

Developers welcomed this development noting it can perk up demand.

"We welcome the plan to raise the VAT-exempt cap since it will allow more buyers to purchase a home. A substantial portion of the real estate market is at the P2 million and P3 million price range. Any reduction in their purchasing cost, brought about by savings form VAT exemptions improves the affordability of housing products, said Danilo Ignacio, president of Eton Properties Philippines, Inc.

"It will make our projects more affordable since our projects fall between P2.5 million and P3.5 million. It’s more for the benefit of the buyers," Anabelle Arceo, FLI investor relations.

The housing backlog in the Philippines has been pegged at 3.6 million units as of 2010, a big portion of which are in the low-end segment and of the price band.

Increasing the VAT cap allows buyers to acquire a bigger unit for the same price prior to the increase. As it is, VAT computations are already imputed into the published price of units for those that exceed the exemption limit.

The new policy, however, does not only benefit buyers since a boost in the sale of units will also redound to better returns on developers.

This would also allow the company to recoup investments in developing units which are just parked on the property until it has been sold.

Pag-IBIG president Darlene Berberabe meanwhile said the agency is looking for ways to establish the supply of units for household helps and security guards whose incomes are very limited compared to the traditional market focused on by developers.

Berberabe said Pag-IBIG may opt to spearhead the construction of the units which will be priced at P200,000 each, quite within the paying capacity of household helps.

"The formula is to package a housing unit that would only cost the borrower P2,000 in monthly amortization, according to Berberabe.

Berberabe said Pag-IBIG will also entertain developers interested to service the segment.

Recently, the Housing and Land Use Regulatory Board (HLURB) instructed developers to engage in the construction of socialized housing units instead of the previous practice of just participating in a lending scheme that provides funds to other developers focusing on the segment, in order to create the supply that will meet the demand in the market.

A socialized housing is priced at P400,000 per unit.

Berberabe said Pag-IBIG wants to "plow back" to members some P4.5 billion in tax savings in the previous years, given the agency’s tax-exempt status.

As it is, the agency will continue to provide a 1.5 percentage point subsidy to socialized housing buyers whose income falls at the P180,000 cap.

At present, Pag-IBIG demands a 7 percent interest for lenders buying socialized housing units.

"I think there is further room to explore how to lower housing packages to make it affordable to these Pag-IBIG members. We are looking at maybe continuing the subsidy and looking at others on how plowback the tax savings for the socialized housing," said Berberabe.