Second of three parts

SPECIAL REPORT: The woes of buying a home in the hyperactive, under-regulated PH market


A row of tiny sand-colored townhouses on the block where Jane’s (not her real name) home of two years is located looks particularly serene, unperturbed by the woes suffered by their supposed owners in the process of acquiring them.

Except for the fact that only her house in the row of 10 units is occupied, outwardly there is no sign of a “problem.” The houses appear to be in good repair, if a little drab looking, and even the grass and weeds in the uninhabited yard spaces have been trimmed. Jane’s own house, which she shares with her two teenage sons and her husband, when he is not deployed to the far corners of the globe as a merchant seaman, is pleasant and tidy, but appearances can be deceiving.

“I’ve met most of the people who are supposed to be buying these,” she explains. “They come to visit on their own, or the property agents bring them here to see the houses. But nobody’s moved in yet.” She points to each house in turn, and recites a litany of issues: These three are not finished on the inside, even though the people have paid up and are waiting to move in, this one has some kind of trouble with the electrical wiring, this one was sold but the people have backed out and are trying to get a refund, this one on the end had some squatters in it, but the property company hasn’t cleaned it up and repaired it yet.”

Recalling her own home-buying experience causes Jane to roll her eyes and sigh dramatically. “Hay naku, it took so long. More than two years, from the time we first looked at the area and decided we would buy here until we finally moved in,” she says. “There are so many requirements. We had the money saved for the down payment, almost half the price for the house, it took us years and years, but even so, it took a couple of months to be approved. Then they said it would take time to finish the house, so we just made monthly payments for the down payment as they suggested—15 months, we did that. And then the house still wasn’t ready.

“And then, when we finally were able to move in, I think it was about three months past the due date, what did we find? Cracks in some of the walls,” she continues. “My husband said it was because they didn’t mix the concrete right for plastering, or something like that. I don’t know, he knows about these things,” she adds with a laugh. “Anyway, we were so tired of waiting, we didn’t even bother to complain about it. My husband just patched them up himself when he was home for vacation.”

Asked about the title for her home, Jane frowns. “We haven’t seen it yet,” she says.

“I guess we don’t get the actual, “official” title until the house is fully paid, but they said we could have a copy. I’ve asked, or my husband has asked a couple of times for it, but every time, it’s ‘being processed.’ And then, we found out we don’t even own the lot. Just the house; the property belongs to the village, or the property company I guess. That was a surprise, because we thought we were buying a ‘house-and-lot,’ like it was advertised. My husband—galit na galit siya (he’s furious)—he wanted to file a case. But we read all the paperwork very carefully, and no, it actually explains it if you look hard enough. And we signed that, so…”

But the pride of home ownership is apparently a powerful panacea, because Jane smiles as she looks around her own living room. “Still, it’s our very own house, and after all that, it’s okay. We like it.”

Fast and loose?
How typical Jane’s story is, or the stories she tells of other homebuyers, really seems to be difficult to determine with any reliability. The subdivision where her home is located, Lancaster New City in Imus, Cavite, is one of the flagship projects of property developer Company of Friends Inc. (ProFriends), and both the company and its property projects have been the source of some controversy in recent months.

The issues raised against ProFriends in connection with its business are apparently not unique, but prevalent among many other property developers. As the Global Property Guide noted in an overall assessment of the Philippine real estate sector published earlier this year, high transaction costs, red tape and time-consuming loan and purchase approval processes, problems with land titling and registration, construction quality issues, and lack of infrastructure and amenities in some developments are persistent complaints among residential property buyers.

In another case that attracted some media attention last year, New San Jose Builders, which has been developing several condominium projects throughout Metro Manila, was accused by several would-be customers of not delivering units as promised and delaying refunds. In one instance, a buyer who was interviewed by Channel 5 claimed that she had shelled out a P200,000 down payment for a condo unit to be delivered in 2014, only to discover that the location of the supposed project (called Victoria Station 2 and located near the GMA-Kamuning MRT station) was still a vacant lot by the fall of 2013. The company had allegedly been pre-selling units since 2010, but the project was the subject of a cease-and-desist order (CDO) issued by the Housing and Land Use Regulatory Board (HLURB), because construction had started before New San Jose Builders had obtained the required Certificate of Registration and License to Sell from the agency.

At the time, New San Jose explained away the controversy by clarifying the necessary paperwork was “in process” and claiming that pre-selling properties before the required clearances were obtained was common practice (even though that is against the law, according to the HLURB). The present status of the year-old controversy involving New San Jose Builders and its troubled project appears to be unchanged, however; according to the most recent listing of CDOs available from HLURB, two such orders—one issued in May 2010 and another issued in August of last year—are still in force.

In an interview with The Manila Times, officials of Amicus Holdings Inc., the parent company of ProFriends, were asked to respond to some of the complaints raised about their projects. They offered a clue as to why some developers may be tempted to play fast and loose with legal requirements.

“Since 1999, we’ve had about 43,000 home buyers, and we’ve had about 36,000 houses available. Yes, we have a very small percentage of delays, in the context of the number of homes that we’ve delivered already, but this is a consequence of the surge in sales. The surge in sales and demand naturally leads to a decrease in supply, and that causes some delays,” Amicus Holding’s marketing head Vince Abejo explained.

“We try to resolve our bottlenecks in production,” Amicus Chief Financial Officer Joseph Dolina added, when asked about reports of delays of up to two years in delivering houses to buyers. “I think we’ve been able to address a good part of it [the delays]. Part of the problem, though, is that our houses are built-to-order only if the buyer has finished the 15-month down payment term. It’s only after the 15 months that we can be assured of turnover, so we finish the house at that point.

Because sometimes, others avail [of the property]and due to whatever reasons, cancel their availment. So in order to prevent that, we wait for buyers to complete the 15-month payment then we could be assured of turning over the units.”

Dolina’s explanation does not, however, address the case of a buyer of a Gabrielle
house-and-lot unit in the Lancaster Estate, perhaps one of several buyers who have fully paid the total contract price to avail of a promo discount offered by ProFriends but have yet to see the structure built more than two years since the amount was settled.

Abejo further explained, “We have about 2 percent [of ProFriends buyers]that have complained. Though it’s a small percentage, that doesn’t mean it’s to be ignored. For a first time homebuyer, even 2 percent means a lot. I assure you, we’re on the way addressing these delays. We take the delays very seriously. And actually, it’s not just the company, but it’s an industry-wide issue because of the surge in demand.”

An overworked regulator
The agency that is primarily responsible for overseeing the residential construction industry is the HLURB, which must approve any project before it can be sold to buyers. The contention of New San Jose Builders that “short-cutting” the process and marketing new developments before licenses to sell are actually obtained is a widespread problem – several other property companies the Times contacted, while hesitant to admit they engage in the practice, did acknowledge that it is done probably more often than the HLURB or the public realizes.

Part of the problem stems from the lengthy approval process. In its “citizen’s charter” posted on its website, the HLURB describes the process of approving a residential project in detail—a process that has 29 separate steps and can take up to 57 days. Depending on the nature of the project, fees for all the necessary requirements can range from several thousand to several million pesos, and must be paid to several agencies or government units.

In practice, though, the sheer volume of applications makes the process much longer. One HLURB official speaking on condition of anonymity admitted, “We simply have more than we can handle in the timeframe goal we’ve set for ourselves.

We have implemented some ideas to speed up our processes, especially when it comes to addressing complaints and conflicts over real estate transactions, and things have improved a lot from last year, but we still struggle to keep up with the volume of business.”

That may bode ill for consumers who are caught by situations like the New San Jose Builders case last year; in that instance, at least one customer was told by the HLURB that it could take up to a year for his complaint to the agency to be resolved.

For now, the best consumer protection appears to be foreknowledge. On its website (, the HLURB posts a listing organized by region of projects that have had a CDO issued against them, and also provides a search function where a prospective buyer can look for information about a specific developer or property agent.

An image problem
When asked if, knowing what she knows now, she would go through the process again, Lancaster New City homeowner Jane said: “Honestly, I don’t think so,” she said. “Now, in fairness, we did get what we paid for, the problems we had were solved eventually, and even though some of the things that were advertised—the ‘clubhouse,’ the ‘pool,’ the ‘shopping area’ weren’t here, or weren’t exactly what they looked like in the brochure when we finally moved in, it seems like they’re slowly working on it. So we’ll see. Owning our own home, actually living in it, that means a lot to our family. I guess that makes a lot of the trouble we went through worth it. But would I do it again? No, not if there was a better choice.”

That perspective should be a serious cause for concern for the residential property sector. It does not seem a tipping point between demand for the product and a general perception that the product is undesirable has been reached yet, but unless the industry can improve its image—an image that is, after all, being damaged by actual experiences, even if the true extent of those experiences may be debatable—that tipping point might be reached rather quickly.

The issue of business performance in the residential real estate sector contributes to the persistent concern that the country may be experiencing, or about to experience, a real estate “bubble” and a resulting serious downturn in the industry.

From one perspective, strong demand among a market that is mostly composed of end-users planning to occupy and keep their homes is a sign of a healthy market that, barring an unforeseen circumstance such as a general economic downturn, should continue on its current trajectory for some time to come. But if that demand changes, the sector could be in big trouble.

In the next installment of this special report on Friday, the prospects of the industry for the next few years will be examined in an attempt to answer the burning question, “Are the warnings of rough times for the property ahead valid or not?”


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  1. I’m so glad I live in the us. Philippines has issues and it seems like there is no accountability. It is so pro business and against the consumer.

  2. I think the question should be “when will the bubble pop?” The prices are so high and yet people are still buying. But I don’t think majority of these people who bought their proprty through a loan, whom property was used as mortgage will able to pay in full. Why? I don’t know. It’s just a guess. Hehe. I’m looking forward to the Friday article.

  3. We commend your column for sharing this relevant information considering that Amicus Holdings Inc the holding company of Property Company of Friends Inc (Pro-Friends) is planning to raise P7.7 billion through an Initial Public Offering in the Philippine Stock Exchange.

  4. SocialConscience(?) on

    Ang city or municipal council ang mag-approve ng land development for a subdivision. HLURB approves a subdivision or condominium plan. Kasama diyan ang pag-monitor ng construction. Ginagawa ba ang monitoring? Iba ang sinasabi ng experience.

    Consider Megaworld, alledgedly a reputable developer ng condominiums. Sa contract to buy and sell, ang sabi i-deliver ang condo unit in 12 months. Buried deep inside the contract (font size 8), additional 12 months. Actual turn-over 9 months after or 33 months. Breach of contract. Tama? Pag kinasuhan mo, abutin ng 1 generation. Tama?

    Mga assessments – documentary stamp, registration na dapat cost sharing, transfer tax na dapat ang seller ang magbayad kasi yan ang nasa batas, real estate tax, miscellaneous na 30,000.00 ( ano kaya ito?). Pag magmatigas ang buyer, hindi rin malilipat ang unit.

    May makukuhang relief sa HLURB? Wala. Useless. Inutil.

  5. There’s another unregulated Condominiums transferring of title which many thinks it is very shady , once you’re paid off the unit , the developer or the seller charges numerous unreasonable closing amount and they demand to file the papers themselves even tho the buyer has their own counsel to process the title tranfer to save the costly process..

  6. Thank you for bringing this in the open.
    Per the law, HLURB is empowered to approve a subdivision or condominium plan, and to monitor construction. I doubt if they really do their monitoring mandate, to the extent prescribed by law.
    Take the case of Robinsons Land Corporation, a claimed reputable developer.. Our house and lot have long been fully paid. Yet, there is no Deed of Absolute Sale. There is no Title. Their reason? Relevant agencies are too slow. Unless, the law is amended, no developer is allowed to sell a house and lot sans an approved Individual Title. Yet, it happened to us. The so-called Regulator? It is the HLURB.
    On the matter of assessments: the contract is generally vague, but imposed are the ff.: documentary stamp tax; transfer tax (per the law, to be paid by the seller); application for tax declaration transfer fee; registration fee (per the law, must be shared); notarial fee; Facilitation Fee (if 10thou per buyer x 500 buyers = 5 Million, and claimed to be for city hall – imagine), representation expense (if 5thou per buyer x500 buyers = 2.5 Million); and water meter deposit (refundable but never refunded, 2,500 per buyer x 500 buyers = 1,250,000.00).
    HLURB as regulator? Forget it.

  7. Mr Kritz, the answer to your last question is in this article, but I will wait for your final report before I answer it myself. The fact that you are asking this question should be worrisome already. Nice work, less detailed than your first but more powerful in its effect. I believe that a simpler analysis makes for a more robust conclusion, as another erudite fellow can write a similarly heavy report proving the opposite case. Till Friday..