Guide on How to Buy Land in the Philippines
Getting into real estate through acquiring land? Buying an empty land or lot is one form of investment and security. Having a land gives you a sense of ownership and, at the same time, the flexibility to either build your dream home, an apartment, a commercial space, or a place to grow livestock that can yield a good return of investment in the long run.
When buying a piece of land as a real estate property, before calculating how much to buy land in the Philippines, most Filipinos would want to have knowledge on the how: “How to become property owners?”
First-time Filipino home buyers and investors in the country who want to diversify their real estate property portfolios consider buying lots or land in the Philippines. Why? Here is the list of advantages of land acquisition in the Philippines.
Advantages of Buying a Lot
In the world of real estate, most prefer to buy a lot for sale after many considerations of its advantages. Here are some of the advantages a buyer should consider before making the decision:
First-time homebuyers who are working on a budget consider buying an empty lot as their first real estate investment as it is an affordable way of acquiring property than buying a lot with a ready for occupancy house.
Appreciates Over Time
Land ownership has its perks too! Buying land can generate income over time whether you develop it to a residential or rental property or hold onto it and offer it for sale at a higher price in the future. The appreciation of the land can be affected by different factors such as its developments within the vicinity, accessibility, location, zoning laws, and inflation policies.
Aside from this, its market value increases faster if it is within the regions on the rise, real estate hotspots, or those areas located in or near commercial areas, business districts, and tourist spots in the country.
Buying land can give you the flexibility to build your desired real estate properties from a bungalow, townhouse, apartment, open space, or commercial establishments such as markets, restaurants, or malls. Owners of a land has the freewill to build whatever he wants, whenever he wishes to. It can also serve as a place to raise your livestock and crops.
Sense of Ownership and Security
Pride of ownership tops the reasons why Filipinos buy lands or lots. Having your own lot in the Philippines (property ownership) gives us the satisfaction or sense of personal growth for achieving a goal or a dream.
Buying a lot also secure your loved ones as they can develop it into a residential or commercial property in the future. You can also hold the lot and then have it for rent, lease or sell if you need funds for your child’s tuition or a family business – this is the beauty of real estate.
Aside from developing and selling the lot, landowners can also earn profit through land partnership. A land partnership is a joint venture of landowners and real estate developers to create a new land enterprise.
A land partnership differs from the traditional selling of a property where the landowner stops earning when they sold the lot. With a land partnership, both the landowner and real estate developers continuously profit from the land improvements and development.
Things to Consider When Buying a Land
Like any other property acquisition in the country, buying land is not easy as it may seem. As a buyer, there are things that you need to consider before acquiring a lot in the Philippines. Here are the five things you need to consider when buying a lot:
One of the challenging things to do and consider when buying land properties is its location. An ideal location for a lot, is in a region on the rise or near your workplace, commercial areas, business districts, and tourist spots in the country. It should have accessible routes to the hospital, schools, market, malls, and police station. You might want to check necessary information on properties you are considering.
The price of a lot located in regions on the rise might be high, but it can cut some expenses in transportation in the long run. It is also convenient to invest and eventually settle in locations like this because it is accessible to your daily needs.
If a property owner wants to build a house or other property type on this land in the future, bringing and moving the materials that you need would also be easy.
Properties located in regions on the rise appreciate their value faster than properties that are far from business districts and commercial centers.
Reputation of the Developer
The reputation of the developer is another thing that needs to be considered as fraudulent activities in the real estate industry is rampant nowadays. Transacting to a reputable developer means fewer chances of experiencing scams, schemes, and fraud.
A credible land developer maintains their standing, executes timely, and delivers what they promise. They ensure the quality of the community they build; from the material they use and design aesthetics. They also provide a comfortable and lavish lifestyle to land and homeowners by building amenities such as 24/7 security, clubhouses, internal access roads, fitness center, and playgrounds.
One reputable developer in the Philippines is Vista Land and Lifescapes Inc. or commonly known as Vista Land. Vista Land is the largest homebuilder in the Philippines that offers a wide range of lots that cater to the needs of every Filipino. From luxurious, mid-income segments and affordable low-cost lots.
Vista Land is also known for its real estate brands such as Brittany, Crown Asia, Camella, Lessandra, and Vista Residences across the Philippines.
Budget plays a major role when planning to buy a lot for sale. It dictates the size of a lot you can afford to get and pay. What you need to consider when checking your budget are:
- Reservation fees and down payment for the lot.
- Monthly mortgage fees
- Real property tax
- Association fees
- Property insurance
What Financing To Choose
There are three options to consider when you mortgage a property in the Philippines – Bank Financing, In-house Financing, and Pag-IBIG Housing Loan.
The three might seem the same, but they have different requirements for the loan amount, terms, and interest. If you are looking for more information, we can help you as you read on.
Pag-IBIG Housing Loan has few restrictions and requirements for applicants compared with bank financing. Banks, on the other hand, conduct background checks and require submitting supporting documents.
For the loanable amount, the maximum for the Pag-IBIG Housing loan is up to P6,000,000 or 80% of the total accumulated value (TAV). Bank financing varies. It may be the exact amount or 70-80% of the appraised property value.
Banks offer low-interest rates with a fixed rate for about 1 to 5 years. Pag-IBIG Housing Loan, on the other hand, offers fixed pricing for up to 30 years.
Lastly, In-house financing or developer financing is where borrowers can get a direct housing loan from the real estate developer. Unlike Pag-IBIG housing loan and bank financing, In-house financing is shorter-term and usually would take only about five to 10 years.
Another consideration that you need when buying a house and lot for sale is the authenticity of the Property Title.
To make sure that the title is clean, it is a must to check the following:
1. Quality of the paper used
Forms used in property titles are printed by the Banko Sentral ng Pilipinas and have a similar texture to a bank check.
To check if the title is authentic, all you need to do is held the title against the light. If the Land Registration Association watermark is visible through the paper, the title is authentic.
2.Verify the identity of the seller/dealer
With the rising fraudulent issues in the real estate industry, it is a must to check the background of the agent or dealer. To do so, you can contact the developer and ask if the agent is with them.
If not associated with a developer, you need to check if he/she owns the property. If the property title is under the name of parent/relative of the one selling, you need to be assured that all of his family members agree to sell the property.
3. Check the description of the real estate on the title
The land description specified in the property title should match the actual land area when surveyed.
4.Check the status of real property tax
To check if the property tax is updated, you can visit the Assessor’s Office of the municipality where the real estate is situated.
If it is not updated, the they need to update the payment first and make a notarized agreement that the owners will do so.
Now that you are aware of the things that you need to consider when buying land. Here are the steps that you can follow to purchase and transfer it under your name.
Steps on How to Buy a Land
When you decide to buy a land in the Philippines, make sure that you follow these steps that can help you avoid any land ownership dilemma during the process.
1. CHECK THE LAND OWNER OR DEVELOPER OF THE LAND.
To avoid being in a situation wherein several parties claim that the land you bought is owned by them, make sure to check or verify the owner of the land you are buying. How? You can ask for a photocopy of the title from the salesperson to get the name of the owner and title number. You will need these details to secure a Certified True Copy of the title from the Registry of Deeds. The Registry of Deeds is located at the city or municipality where the property is located.
Once you get the CTC of the title, you can verify the prominent details of the lot being sold such as the name of the landowner and the size of the lot.
2. CHECK FOR THE POSSIBLE ISSUES THAT YOU MAY ENCOUNTER.
Now that you have the CTC of the title, make sure to check if the description indicated on the title matches the land being sold. Aside from the title, you can also verify the description through the help of a surveyor, who can check and verify the technical description of the lot.
Another thing that you need to check is the tax declaration of the lot. You can check its status at the Assessor’s Office of the municipality where the real estate is situated.
If the payment is not updated, the property owner/dealer needs to settle the payment or make a notarized agreement that he will do so.
Lastly, it is important to verify the identity of the one transacting for the property. Make sure you are transacting with an authorized salesperson or broker. With the rising fraudulent issues in the real estate industry, it is a must to check the background of the agent or dealer. To do so, you can contact the developer and ask if the agent is with them. If not associated with a developer, you need to check if he/she owns the property. You need to be assured that all of his family members agree to sell the property through a SPA or Special Power of Attorney from the owner or owners of the lot.
3. SECURE NOTARIZED AND SIGNED DEED OF SALE (DS)
Now that you verified that the title is clean, you can now proceed in buying the property. In this step, you need to secure a notarized and signed deed of sale. This document is a proof of that you own the property with all relevant information about the buyer.
4. LAND TITLE TRANSFER
To start the title transfer, you need to provide and submit the documents needed by the Bureau of Internal Revenue (BIR) Revenue District Office (RDO) where your lot is located.
Documents needed are:
- An original copy and two photocopies of the notarized Deed of Absolute Sale (DAS).
- Photocopy of all signatories on the deed of sale.
- Official Receipt of the Notary Public for the notarization of the deed of sale.
- An Owner’s duplicate copy and two of the Transfer Certificate Title.
- A Certified True Copy and two photocopies of the latest land Tax Declaration for land and improvement of the real property or Sworn Declaration of No Improvement for lots with no improvement by the seller or Certificate of No Improvement issued by the municipality’s Assessor’s Office.
- Tax Clearance
- Clearance from the Homeowners Association.
- Certificates such as birth certificate, marriage certificate, and CENOMAR.
- Tax Identification Numbers of both the Seller and Buyer.
- Certificate of No Improvement for lots only.
- Special Power of Attorney if the person processing the transfer is not the owner or buyer of the property. If the Special Power of Attorney is done abroad a Certification of the Philippine Consulate is required.
- Location plan or vicinity map if the zonal value cannot be determined from the available documents.
Once you have submitted the documents, you can get an assessment and pay for the Capital Gains Tax or Value-Added Tax and Documentary Stamp Tax on your BIR RDO’s Authorized Agent Bank or ABB.
- Official and signed computation sheet from the BIR
- Deed of Conveyance
- For Capital Gains Tax- Three copies of BIR Form 1706 signed by the seller.
- For Documentary Stamp Tax- Three copies of BIR Form 2000-OT signed by the seller.
- Cash or Manager’s Check. Make sure to contact the bank for the specific wordings that will be written on the Manager’s Check.
After paying the Capital Gains Tax or Value-Added Tax and Documentary Stamp Tax, you can now submit your documents to your respected BIR RDO to get the Certificate Authorizing Registration or CAR.
After the submission of documents, you will be given an estimated period unto when you will pick up the two copies of Certificate Authorizing Registration, (a blue copy which will be used for the transferring process and a brown copy for your keep safe), original deed of conveyance stamped as Received by BIR and signed by an RDO Officer, and some supporting documents. Usually, it would take at least two to three weeks before you can get the CAR.
Submit the Deed of Conveyance (DC), Tax Clearance, Certificate of No Improvement for lots, BIR Certificate Authorizing Registration, and Special Power of Attorney (given that someone else will process the transfer) to the Treasurer’s Office of the Local Government Unit where the property is located.
The Treasurer’s Office will then compute for the Transfer Tax (including transfer fee) that you can pay either through cash or Manager’s check. You will then be given an Official Receipt for the payment of transfer fee, Treasure’s Office rubber-stamped mark at the back of the DC, and/or a Tax Certificate.
- Deed of Conveyance
- Tax Clearance
- Certificate of No Improvement for lots
- BIR’s Certificate Authorizing Registration
- Special Power of Attorney (given that someone else will process the transfer)
Then submit the documents to the Registry of Deeds for the computation of registration fees. After payment, it would take at least two to three weeks to present the new title.
- Deed of Conveyance
- Photocopies of IDs of all signatories
- Official Receipt of the Notary Public for the notarization.
- Certified True Copy of the Title
- A certified true copy of the latest land Tax Declaration
- Tax Clearance
- Clearance from the Homeowners Association
- Certificates such as:
- Birth Certificate
- Marriage Certificate
- Certificate of None Marriage
- Original and Duplicate Copy of the Title
- BIR’s Certificate Authorizing Registration
- Official Receipt for the payment of Transfer Tax
The last step in processing the transfer of your land title is to submit the documents to the Assessor’s Office of the municipality or city where the property is located. The Assessor’s Office will then issue a new tax declaration wherein the new owner needs to pay the assessment fee.
- A certified true copy of the new title
- Photocopy of the old title
- A certified true copy of the latest Tax Declaration
- Original and two photocopies of Transfer Tax Receipt
- Original and two photocopies of Business Tax Receipt / Business Permit if the previous owner is a corporation
- Duplicate and photocopy of BIR Certificate Authorizing Registration
- Original and photocopy of Tax Clearance
- Photos of property
Cost of Transferring Title
Transferring the land title involves fees (e.g. registration fee) that both need to settle. Here are the fees that are commonly encountered when transferring the land title of properties:
- Unpaid real estate taxes.
- Capital Gains Tax equivalent to 6% of the selling price on the Deed of Sale or the zonal value, whichever is higher.
- Registration Fee – 0.25% of the selling price, or zonal value or fair market value, whichever is higher
- Transfer Tax – 0.5% (in the provinces) or 0.75% (in Metro Manila) of the selling price, or zonal value or fair market value, whichever is higher.
- Documentary Stamp Tax – 1.5% of the selling price or zonal value or fair market value, whichever is higher.
- Incidental and miscellaneous expenses during the registration process.
Given all of these considerations, careful and thorough decision making process is recommended when buying land in the Philippines. A buyer might be driven out of impulse but it is always advisable to double check for the properties that you are eyeing. You might be having a spur of the moment but you are making a big decision here.
Demand for Land in the Philippines
Philippines’ economy has significantly dropped when the pandemic hit, yet the demand for land acquisition continues to rise. These properties for sale caught the attention of many Filipinos.
The increasing number of Filipinos looking for properties in the country is very prominent since the pandemic has started. The demand for buying land in the Philippines has been eyed by developers. Ever since, the real estate market has shown to be significantly stable. Real estate analysts have suggested buying land or a house now given that developers have offered flexible financing terms for their properties.
Are you looking and thinking of buying land in the Philippines? Visit All Properties to get a list of affordable and well-developed house and lot and residential lots for sale in the country. Find the perfect property type for you!