MANILA, Philippines — For the past 49 years, one organization has been relentless in making its mission of providing a home for every Filipino a reality.

The Subdivision and Housing Developers Association, Inc. (SHDA) is celebrating 49 years of actively ensuring the right of Filipinos to own a house that they can call their own.

Comprised of members from different property development companies, the organization has been active in vocalizing the advocacy of the housing industry in the country, which includes partnering with the government and other sectors toward undertaking programs and policies that foster a sustained housing industry vis-à-vis the economic growth of our country.

The real state of Filipino real estate

Owning a home remains a top priority and aspiration of many Filipinos, however, this remains impossible for many as an estimated backlog is reported to have reached 6.7 million as of 2015. A study by the University of Asia and Pacific showed the Philippines would need 12.3 million housing units by 2030. Add to this, the production of houses slowed down in the last two years.

Before, the decline of the housing production, the housing sector was able to meet its target for 2016 of building one million homes, but because of the numerous problems the industry faced, they are unsure if they will ever meet the target of building two million homes by 2022, as first targeted in SHDA’s Roadmap to 2030.

“It’s quite unfortunate that we have a six-million housing backlog in the country and our advocacy is to reduce if not totally eliminate this housing backlog. This housing backlog has been steadily increasing in the past few years, so we feel that there is even more urgency to decrease and eliminate this housing backlog,” says Jeffrey Ng, SHDA chairman.

According to Ng, one of the reasons for the backlog “is the cost of the house vis-a-vis the (ir) income and their ability to pay the monthly amortization. We are working on (reducing), let’s say, the cost of land.

Because by artificially limiting the amount of land available for housing, it makes land expensive. We would like to free up more land, especially around the major cities in the country by making it not as difficult for land conversion.”

Land conversion is the conversion of raw land into construction, residential, commercial, or industrial building sites. In the Philippines, the process of converting land takes two to three years, therefore artificially limiting the amount of land available for housing.

“There is more than ample land available for housing and subdivisions except that the process of land conversion takes two to three years. Now, we are glad that just last month the Department of Agrarian Reform (DAR) Secretary has shortened the land conversion process. We hope that this will ease the shortage of land for housing purposes,” says Ng.

The department has introduced a memorandum that shortens the land conversion process from 24 months to 30 days.

This happened after President Rodrigo Duterte ordered the creation of a task force to look into any anomalies in the land conversion process and to expedite the conversion of agricultural lands into residential, commercial, and industrial uses; as well as, tasked the task force to simplify the procedures and do away with redundant certifications.

“We look forward to working more closely with DAR and other government agencies for us to be able to have quick land conversion approvals and for us to be able to start construction of these housing units,” he adds.

Another problem contributing to the increasing housing backlog is the outdated building codes that SHDA is striving to streamline. “A lot of these codes—building codes, structural codes, and the like—are still enacted into law, these were enacted in the 1970s and 1980s. Times have changed, so the law has to change except that since these codes are legislated, to change these codes mean the creation of new laws. With so many issues being faced by the country, the legislating of new design codes for construction does not fall on the priority list. One of the things we are espousing now is to set a basic law to harmonize the different codes,” says SHDA president Raphael Felix.

“There is a bill entitled the Philippine Building Act of 2018 that is ongoing now. Its objective is to be able to blend all the codes together and if there are any changes—brought by the changing technology, changing travel patterns, the changing climate conditions—it will be through the implementing rules and regulations (IRR), without having to amend the law itself.”

“SHDA is doing everything it can to be heard within the halls of government to be able to help in the production of houses. Building and selling is not the problem. The problem is starting a project and it’s that process that we have to ease and make smoother. Any time savings is money saved. Any money saved will endure to the benefit of the buyer also; the more we spend, the more the cost goes up especially in socialized economic housing segments where the backlogs are most felt.

"It’s really price-sensitive and therefore it’s really something that we have to make sufficient as fast as possible. And as I’ve said, it’s not the building and the selling; its land availability, it's permitting it, it’s the planning process whereby we have to make all the different codes—electrical code, building code, the structure code, all coincide with each other and not run in conflict with each other,” he adds.

Another issue that SHDA is advocating in terms of reducing the housing backlog is the retention of the tax incentives upon the passage of the second Tax Reform for Acceleration and Inclusion (TRAIN-2) bill or TRABAHO.

“We are also fighting for the retention of the income tax holiday that might be removed when TRAIN-2 gets passed. If we want to help the production of socialized economic housing, the income tax holiday and other incentives must remain in place,” says Felix.

TRABAHO refers to the second package of tax reforms being pursued by the Duterte administration. The package deals with provisions in the tax code related to businesses and corporations and aims to make the tax system simpler, fairer and more transparent. It also proposes to cut corporate income tax (CIT) from 30 to 25 percent.

The 30-percent CIT is one of the highest rates in Southeast Asia. In addition, it is also looking at taking away fiscal incentives, including tax exemption from businesses in export processing zones.

Many businesses have expressed concerns warning that the proposed tax package would scare off investment pledges and existing jobs particularly from the manufacturing and business processing industries.

“There needs to be things put in place by the government, and one is you don’t remove the tax holidays. Removing the tax holidays just aggravates [the housing backlog] even more. Those are the things that really affect housing production. By streamlining the land conversion process, shortening the permitting process, shortening land conversion, and being able to open up the regions with infrastructures—these are the things that will spur housing production.

Another issue contributing to the increasing housing backlog is the availability and affordability of socialized housing. For the last 10 years, SHDA was in the forefront of introducing the concept of “in-city” socialized housing, presenting studies and meeting with the different concerned government agencies, and eventually lobbying for the inclusion of in-city socialized condominiums in order to address the lack of in-city socialized dwellings. RA 10884 eventually lapsed into law—raising hopes of our minimum wage earners to afford a home within the cities where they work.

Sadly, however, the newly approved socialized housing price ceilings present another obstacle. Felix shared that in the past Housing and Urban Development Coordinating Council (HUDCC) administrations, there was already “an agreed” price ceiling set for socialized housing. But the price ceiling that was approved last year was way lower than the originally set price ceiling. “Instead of helping, it became a deterrent because the price per square meter was effectively reduced and made production unfeasible.

Consequently, in 2018, it was socialized housing that experienced the largest decline in terms of Licenses to Sell issued, close to 50 percent.

For former SHDA chairman, Willie Uy, he sees the numerous requirements needed when buying a house and the changing rules for developers contributing to the situation. “I’m not blaming anyone for [the many requirements needed when buying a house], because you really need to go through that to make sure that you could afford a house and you could afford to pay for it in the next number of years. [As for] the changing rules for developers—I have a term for that, I call it regulatory terrorism.

"As a developer, you already have a plan of what you want to do and your objective is to build as many houses as you can. You start buying land, you start investing in the land, and then two years or maybe even six months from now, there is a new rule being implemented. It’s so difficult and so expensive, there is so much planning money wasted because you’ll have to change the ideas to fit certain regulations, size requirements, lot requirements—I mean these are only some of them and it’s really frustrating but hopefully we’re doing our best and hopefully there will be government officials who are willing to listen,” he shares.

“I don’t think anybody can say that within the next five years, we’d be able to fix the housing backlog but what we can do—and if the government is really serious about it—is to lessen all these regulations and to make it easier for us to concentrate on the production of houses. Everyone is willing to build, but if we’re only limited to certain things, how can we continue?” he adds.

Source:Philstar