Enabling production through sound housing regulation

Published January 25, 2023, 12:05 AM

by Manila Bulletin


By Charlie A. V. Gorayeb, national chairman of CREBA

Article XIII, Section 9 of the Philippine Constitution mandates that “the State shall, by law, and for the common good, undertake, in cooperation with the private sector, a continuing program of urban land reform and housing.” In the long term, such program is aimed at making available at affordable cost, “decent housing and basic services to underprivileged and homeless citizens in urban centers and resettlement areas.”

This is the major foundation for the passage of the Urban Development & Housing Act or UDHA in 1992 through which, backed by an eagerly supportive housing development sector confronted by an already ballooning housing backlog, government imposed upon developers of subdivision projects the responsibility to build socialized housing units equivalent to 20 percent of their total project area or cost to help accelerate the country’s housing production rate in exchange for various types of incentives.

By 2010, rapid urban migration statistics have tipped to almost 50 percent of the total population while the rapid ascent of the country as a global BPO hub and the scarcity of urban spaces gave rise to a robust condominium market, especially among the young professionals as well as the OFWs who prefer to work and live within or near urban development centers.

Hence, CREBA supported the amendment of the UDHA thru Republic Act No. 10884 which reduced the balanced housing quotas for subdivisions to only 15 percent to make it easier and more realistic for developers to comply with and still be able to effectively uphold its core and crucial mandate to deliver housing units for the marginalized beneficiaries.

Condominium developers, in turn, started carrying the same social burden for up to five percent of their total project area or cost since 2016.

However, legislative efforts are currently underway for the revision of the law anew to the consternation of private developers.

If approved, House Bill No. 1234 filed by Rep. Bernadette Herrera-Dy will jack up mandatory compliance by condo developers to up to 20 percent, while House Bill No. 3589 filed by Rep. Michael Romero will require subdivision compliance to as much as 25 percent.

The Chamber of Real Estate & Builders’ Associations, Inc. (CREBA) opposes such changes for being untimely and anti-development.

1. Mere permits and license applications for each stage of property development, not to mention actual construction, takes at least five years to unfold, hence, sudden changes in regulations will be economically disadvantageous, risky even, for developers.

2. Socialized housing development is not a core nor is it a profitable business for many developers, and any further attempts at over-regulation or over-taxation by the legislature or regulatory bodies will ultimately affect affordability because developers have no choice but to pass on any additional cost to the homebuyers.

3. Further increases in balanced housing quotas violate what is supposed to be a “cooperative” atmosphere and conducive environment where government is supposed to act as a business-friendly enabler rather than a stifler of growth.

4. The new requirement will bring a screeching halt to projects that are already in the pipeline and will only suppress the newly-found resurgence of the property sector from the negative effects of the pandemic, to the detriment of job creation, tax generation and the massive cross-industry value-chain of opportunities that would have been stimulated by new housing construction activities.

It must not be gainsaid that along with food and clothing, shelter has always been one of mankind’s most basic needs. Bringing about disincentives to an economically potent housing industry that has yet to be completely back on its feet is then like killing the goose that lays the golden eggs, so to speak.
In order to realize the current administration’s vision for an increased annual national housing production target of up to one million homes, first, government must rationalize the incentives program for housing to ensure that all incentives offered by specific agencies are synchronized and are made as easy and practicable to avail of as possible.

To assist the private sector in fulfilling its role in the production and delivery of socialized housing units, the government must perform its mandate as catalyst for national development. It must therefore eliminate the huge stumbling blocks to effective and efficient mass housing delivery.

What the industry needs is less bureaucracy, quicker release of licenses and permits, more loanable funds from government financing institutions through a Comprehensive Home Financing Program (CHFP) for all first-time home buyers whether or not they are members of SSS, GSIS and the PagIBIG Fund, better incentives for real estate developers, and a clear identification of lands that may be set aside for residential, agricultural, commercial, industrial, and other equally vital uses as already governed by various existing laws.

These should make home ownership affordable even for the low-income earners and finally bridge our housing supply and demand gap.

(Charlie A. V. Gorayeb is the national chairman of CREBA, the largest umbrella association of developers, builders, contractors, supplies manufacturers and professionals engaged in housing and various types of real estate development. With close to 30 chapters all over the Philippines, it has served as the ‘vanguard’ of the property sector since its inception in 1973.)