Located in the west of the Pacific Ocean, the Philippines is a multi-ethnic archipelago in Southeast Asia, with an area of 299,700 square kilometers and a population of 104.90 million (2017). This country is made up of about 7000 beautiful islands. Due to the strong economic growth, the growth of house prices in all major parts of the Philippines is eye-catching. It has become a popular place for foreign home buyers.

Leechiu, a real-estate service provider, reported that mainland Chinese buyers are dominating the residential market in the Philippines. The report shows that after the surge in mainland China buyers, overseas Filipino workers are no longer the main buyers of the residential market. Strong demand has also set a record price for property sales, with rental apartment prices in the Bay Area rising by 80% over the past three years.

Filipinos can communicate in fluent English, and house prices are much lower than those in other parts of Asia, so it is not surprising that many people decide to buy a house or retire in the Philippines.

In this article, Uoolu will introduce to you all the things that you must know in buying a house in the Philippines.

Can foreigners buy houses in the Philippines?

Because foreigners are not allowed to own land in the Philippines, they often buy condos. In addition, foreigners can only own 40% of houses in an apartment building.

In Southeast Asia, it is not uncommon for foreigners to have no land. It’s also true in Thailand, Cambodia and Vietnam. But there are ways to deal with this problem.

How can foreigners buy land in the Philippines?

For example, you can buy land through a company, but Filipinos must take up the majority of the company's stockholders (at least 60%). Some people suggest that getting married with Filipinos can earn 50% of the rights. But it doesn't seem worthwhile for me to do so just to own land.

Some foreigners still buy land through company, which is the same in the U.S. and Thailand.

The process of buying a property in the Philippines.

As I mentioned in my previous guide, it is very important to have a good understanding of the whole process of buying a house in a strange country. Even if the process is mostly similar, different countries are not the same. For example, whether you can apply for a local mortgage is different in every country.

Let's take a look at the process of buying a property in the Philippines. First, you should get approval in principle from the bank (if you need a mortgage).

Apply for a loan in a Filipino bank

New houses in the Philippines are generally futures marketable housing. The general delivery period needs a wait of 4 to 5 years. That is, home buyers can pay the final sum of house price 4 to 5 years later. If the purchase funds are not enough, it is important to find a bank and obtain pre-approval. Pre-approval will ensure that the bank checks your visa type, financial status, working status, age and credit history to give you the opportunity to borrow.

After receiving the bank's approval, you can start looking for affordable properties on your budget. Before that, foreigners could hardly get mortgage loans, and only a small number of developers supported foreigners' loans, so you could apply for local housing loans.

The largest and most famous banks that can provide foreigners loans are:

· BDO Financial Bank

· Capital Bank

· Portuguese Investment Bank

·Bank of China

Choosing a loan bank depends on factors such as application threshold, loan term, interest rate and repayment method. This is what buyers need to notice.

Find a well-known service platform for housing purchase in the Philippines

There are many consulting agencies or sales companies that help buy real estate in Philippines, but finding a suitable property is not so simple. Choosing a good service platform, such as Uoulu.com, which was established in 2015, will greatly reduce the time spent on housing purchase and the risks that may arise.

Things to notice before sign a housing purchase contract.

If you buy a new house, the developer is responsible for drawing up a sales contract, which includes:

· Names and personal data of you and the developer

· House information

· House price

· Your signature and the developer's signature

What taxes do non-resident foreigners need to pay?

Taxes vary from country to country, so you need to be aware of the local taxes that need to be paid. One or more less taxes can cost you.

Stamp duty

Stamp duty is 1.5% of sales price (if the sales volume is greater than the regional price).

Transfer tax

Transfer tax is 0.75% of sales price or regional price, depending on which one is higher.

Rental Income Tax

Non-resident foreigners have to pay 25% of rental income in the Philippines. However, many foreign land lords suggest that the local government is not aware of the rental situation, so they have not been notified to pay the tax.

Capital gains tax

Capital gains tax is 6% of the value-added part of the sale price.

Where should I buy real estate in the Philippines?

For foreigners, you usually need someone to point out suitable areas to live in. Let's take a look at two hot spots in which foreigners like to buy real estate in the Philippines.

Metro Manila

It’s the capital of the Philippines, also a city with a population of thirteen million.

However, the so-called metropolis is composed of several cities, including Quezon city. The total population add up to 20 million people.

More importantly, there are some areas attracting foreigners in the vicinity of Manila, including Makati, Quezon and Dayi.

Cebu

Cebu is the third largest city and attracts a large number of tourists every year.

The pace is slower here compared with the Manila, and if you want to practice scuba diving and go sightseeing, this is great place for you (a total of 167 Islands).

House prices here are much lower than those in Manila, making it a place suitable for retirees to live and those who want to have properties in a foreign country.

The city does not depend solely on sightseeing. They also produce many boats and articles. In fact, 80% of the ships of the Philippines are built in this city, making it the fourth largest shipbuilding nation in the world.

Summary

The Philippines is famous for having the most beautiful island in the world.

The locals have no problem communicating in English, making it a favorite place for many Americans and other retirees from other countries.

Living cost in the Philippines is much lower than that of other parts of Asia, such as China, Hongkong or Singapore. The economy is also growing steadily, with an average economic growth rate of about 7% in recent years.

You can't own land in the Philippines, so many foreigners prefer to buy an apartment (condo).