By Juliana Chloe A. Gonzales, Reporter
THE PROPOSED rental subsidy program for displaced families could support demand for affordable housing, but private developers may need longer-term financing arrangements and regulatory support to participate in rental housing projects, a property developer and analysts said.
Crispin Y. Carreon, chairman of affordable housing developer NEXTASIA Land, Inc., said rental subsidies could encourage private-sector participation, provided the government introduces measures to help developers finance and operate affordable rental properties.
“For private developers, however, rental subsidies should ideally be complemented by long-term, low-cost development financing, access to suitable land, and efficient permitting. If these elements come together, affordable build-to-rent housing can become a viable new asset class rather than simply a social obligation,” he told BusinessWorld in a Viber message last week.
He said the proposed subsidy period could pose challenges for developers seeking financing for rental housing projects, which typically require longer investment horizons.
According to Mr. Carreon, rental housing assets generally operate over 15 to 30 years, while the proposed subsidy program provides an initial assistance period of up to three years, subject to renewal.
“Three years is helpful for the tenant, but from a project-finance perspective it is relatively short,” he said.
He proposed longer-term government commitments, master lease arrangements, or credit enhancements to provide greater certainty for lenders and developers financing rental housing projects.
Mr. Carreon also proposed a public-private partnership (PPP) framework under which developers would finance, construct, and manage rental housing projects, while the government would handle rental subsidies, beneficiary qualification, and policy oversight.
He said rental housing could also support families affected by infrastructure projects, particularly those requiring relocation because of site clearance and right-of-way acquisition.
Mr. Carreon noted that affordable rental developments should meet safety and disaster-resilience standards.
“Affordable should never mean lower standards of safety. We believe the best affordable housing is not merely inexpensive to construct. It should also be safe, resilient and economical to operate over its entire life cycle.”
RENTAL SUBSIDY PROGRAM
The Senate approved Senate Bill No. 2503, or the proposed Rental Housing Subsidy Act, on third and final reading on Oct. 8.
The measure seeks to establish a rental subsidy program for underprivileged and homeless families displaced by natural calamities, evictions, or public infrastructure projects while they await permanent housing or resettlement.
Under the proposal, assistance may be provided through direct rental payments to lessors or rental vouchers for use in public rental housing.
The subsidy would be based on prevailing rental rates, household housing requirements, and beneficiaries’ financial capacity, without exceeding the actual rental cost.
Assistance may initially be granted for up to three years, subject to annual renewal for eligible households that have yet to secure permanent housing.
The Senate also approved Senate Bill No. 2507, or the proposed Affordable and Decent Rental Housing Incentives Act, on third and final reading on Oct. 8.
The separate measure seeks to encourage the development, construction, rehabilitation, and operation of qualified affordable rental housing through incentives for housing providers.
AFFORDABLE HOUSING DEMANDSavills Philippines Research Director Dino G. Palanca said the proposed subsidies could improve access to rental housing among eligible displaced households.
“The subsidy could help give lower and middle income families more room to afford rental housing, so we could see stronger demand for units within the price range covered by the program.”
Mr. Palanca said direct government payments to lessors could also encourage private-sector participation, provided administrative procedures remain manageable.
He said rental assistance could provide temporary financial relief to displaced families without requiring them to immediately commit to homeownership.
“For many families, the rental assistance would simply provide some breathing room. It could allow them to rent a decent home while they recover financially or wait for a more permanent housing solution, instead of having to make a major housing decision under pressure,” he said.
Ma. Ella C. Oplas, an economics professor at De La Salle University, said rental subsidies could offer a more immediate housing response than constructing new public housing developments, particularly for families requiring temporary shelter.
“I would not say categorically that rental subsidies are always cheaper than public housing. However, given our fiscal state, rental for households that need temporary shelter because they have been displaced, can be more fiscally and operationally efficient in the short term.”
Ms. Oplas noted that rental assistance would not require the government to immediately acquire land, undertake construction, or wait for new housing units to be completed.
COMPLEMENTING 4PH
Colliers Philippines Research Director Joey Roi Bondoc said the proposed Rental Housing Subsidy Act could complement the government’s Expanded Pambansang Pabahay para sa Pilipino (4PH) Program by providing temporary housing assistance while permanent units are being developed.
“We think that this can complement the 4PH program of the government. The 4PH program is essentially socialized vertical housing, and I understand that perhaps immediately you cannot build all the necessary units in Metro Manila to bridge that gap,” he said in a call.
He said existing affordable condominium developments, particularly those outside major business districts, could provide additional housing options while government-backed projects are under construction.
However, whether unsold private condominium units could qualify under the proposed direct rental assistance mechanism remains to be clarified.
Mr. Bondoc also noted the importance of property management in maintaining the value of condominium developments that could be used for rental housing.
“The important thing here is the property management, because if you have a condo and you don’t manage your property well, that will likely result in erosion of the property value. You can combat that by implementing top-notch property management.”
Separately, the Department of Human Settlements and Urban Development (DHSUD) announced in September a planned financing arrangement under the Expanded 4PH Program that would allow private developers to sell existing condominium units priced at P3 million and below through the Pag-IBIG Fund.
The planned arrangement, which is distinct from the proposed rental subsidy program, is intended to help developers address unsold condominium inventory while expanding homeownership options for qualified buyers, according to the DHSUD.