FIFTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
First Regular Session 
SENATE 
S. No. 969 
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Introduced by Senator Manuel "Lito" M. Lapid 
EXPLANATORY NOTE 
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The National Statistics Office reports that in the year 2000, family spending in the 
Philippines averaged at Php118,002 of which 14.2% or Php16,756 per year or an equivalent of 
Php1,270 per month of was allocated for housing. Out of a total of 12.5 million families, 28.4% 
involving some 4.3.8 million families fell below the poverty threshold. 
The acquisition of housing units, no matter how liberal the terms, is clearly beyond the 
budget of even the average household. This is one of the reasons for the unsustainability of the 
country's mass housing programs that target the acquisition of housing units by lower income 
households, and the high default rates among the accounts funded or guaranteed by the 
National Home Mortgage Financing Corporation. 
In the wake of the disastrous results of the government's mass housing programs, 
policies that would promote the availability of rental dwelling units would appear to be the more 
market oriented, cost-effective and viable alternative. 
This bill seeks to stimulate the market for rental dwelling units through the following 
provisions: 
a. 
Exemption of rental income from dwelling houses and lots from the Value-Added 
Tax (VAT) under the existing law; 
b. 
Exemption of dwelling houses and lots from any increases in real estate tax 
imposed by local government units based on taxing powers under R.A. No. 7160 
otherwise known as the Local Government Code; 
c. 
Granting of tax credits for 25% for gross rentals derived from units covered by 
rental regulation up to December 31, 1997 pursuant to R.A. No. 7644 and five 
years thereafter provided that the rates are not increased by more than 20% for 
each calendar year even after the end of rental regulation using the base rental 
rate of December 31 , 1977 but in no case more than P40,000 per annum per 
unit; 
d. 
Granting of tax credits for 25% of the contractor's fee, where a contractor-
developer constructs dwelling units for private housing rentals; and 
e. 
Entitlement to socialized housing financing of dwelling units for rent at 
, reasonable affordable rates for original construction, repair or conversion from 
private dwelling units into residential apartments. 
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MArfZ "LITO" M. LAPID 
Senator 
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FIFTEENTH CONGRESS OF THE REPUBLIC 
OF THE PHILIPPINES 
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First Regular Session 
SENATE 
S. No. 969 
Introduced by Senator Manuel "Lito" M. Lapid 
AN ACT 
TO PROVIDE INCENTIVEiS FOR THE PRIVATE SECTOR TO UNDERTAKE 
RESIDENTIAL HOUSING AT RATES AFFORDABLE BY LOW AND MIDDLE 
RENTAL INCOME FAMILIIES, AND FOR OTHER PURPOSES 
Be it enacted by the Senat4~ and House of Representatives of the Philippines in 
Congress Assembled: 
SECTION 1. 
Short Title. - This Act shall be known as "Incentives for 
Rental Residential Housing by the Private Sector Act of 2010." 
SEC. 2. 
Declaration of Policy. -- It is hereby declared the policy of the 
State to provide the basic nl~ed of shelter for the homeless low and middle income 
families with the cooperation of and by providing incentives for the private Sector. 
Towards the attainment of this policy, incentives for the private sector are herein 
provided to promote, accelerate and enhance continuity of the public and private 
sectors' cooperation to provide residential housing for rent at reasonable affordable 
rates. 
SEC. 3. 
Incentives for Rental Housing by the Private Sector. - Any law 
to the contrary notWithstanding, the following incentives are hereby granted to 
encourage, promote and support the private sector to provide rental residential housing 
for low and middle income families: 
(1) 
Exemption from the Value-Added Tax on lease of properties of the rentals 
from dwelling units covered by R.A. No. 7644 and such dwelling units which 
are 
hereinafter leased for 
residl~ntial housing of low and middle income families by 
renovation of existing units into rental apartments or by construction of new dwelling 
units for residential housing of low or middle-income families; 
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(2) 
Exemption from any local government taxes on real estate over the rates 
, 
of levy imposed as of the effectivity of this Act under the Local Government Code of 
1991 (RA .. No. 7160), to the extent of the tax increase arising from the increase in the 
assessed value of the property from and after the effectivity of this Act: Provided, That 
the real estate and dwelling units constructed thereon are covered by RA. No. 7644, 
the rental regulation law, up to December 31 , 1997: Provided, further, That the 
exception shall continue for five (5) years after December 31, 1997 for as long as the 
rental rates imposed for the calendar years after 1997 are those provided for under RA. 
No. 7644 with an increase of not more than 20 percent (20%), cumulative and 
compounded based on the actual rate imposed as of December 31, 1997, but not more 
than Php40,000 per annum per unit; 
(3) 
Tax credit of twenty-five percent (25%) of the gross rentals for five (5) 
years following the completion of the new or renovated housing units for rental housing 
for low and middle income families earning less than Php100,000 per annum at rental 
rates of not more than Php40,OOO per annum per unit and the right to deduct the cost of 
necessary repairs of the rental units from gross income derived from rentals of the units; 
(4) 
Tax credit up to twenty-five percent (25%) of the contractor-developer's 
professional fees earned from construction of new units or renovation of existing units 
into apartment dwelling units for rental residential housing for middle and low income 
families earning less than Php100,000 per annum and to be rented at not more than 
Php40,000 per annum per unit; and 
(5) 
Entitlement to financing for the necessary repairs to preserve existing 
rental units, renovation of existing units to apartments for rental housing, or the 
construction of new units for rental housing under the developmental financing provision 
, 
of R.A. No. 6846, the Abot-Kaya Pabahay Fund, or the socialized housing program 
under Sec.22 (a) of RA. No. 7660, the Documentary Stamp Tax law, or such other 
Housing Financing for low or middle income socialized housing programs provided by 
existing law. 
SEC. 4. 
Rules and Regulations; Monitoring of Implementation. -- Rules 
and regulations to implement this Act shall be promulgated by the Housing Urban 
Development Coordinating Council (HUDCC) in consultation with the Department of 
Finance (DOF) in cases of tax exemption and tax credits, and with the endorsement of 
national housing agencies with respect to programs for social housing and urban 
development. 
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The implementation of this Act shall be monitored by the Housing Urban 
Development Coordinating Council and an annual report thereof submitted to the 
President and to Congress. 
SEC. 5. 
Separability Clause. - If any provision of this Act or the application 
of such provision to any person or circumstance is held invalid for any reason, the other 
provisions or their application to other persons or circumstances not affected thereby 
shall remain in full force and effect. 
SEC. 6. 
Repealing Clause - All laws, decrees, orders, rules, regulations 
and issuances or parts thereof inconsistent with this Act are hereby repealed or 
amended accordingly. 
SEC. 7. 
Effectivity Clause. - This Act shall take effect fifteen (15) days 
after its publication in at least two (2) newspapers of general circulation. 
Approved, 
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