MANILA, Philippines ? (UPDATE) President Gloria Macapagal-Arroyo signed into law on Tuesday the Rent Control Act of 2009 that would impose a year-long moratorium on rent increases, a move seen to provide relief for 1.6 million renting families.
The new law, Republic Act 9653, will not allow increases in housing rental for a year, and after that, it puts a cap on any increase to only seven percent until 2013.
The law will benefit some 1.6 million families renting homes across the country, majority of whom are paying a monthly rent of P10,000 or less, according to officials.
The ceremonial signing by Arroyo at the Rizal Ceremonial Hall, attended by authors and sponsors from Congress, came seven months after the old Rent Control Law expired in December 2008.
?Remember, we have an economic slowdown, and the significance of the Rent Control Law is that it would somehow assist or help our lesser privileged citizens so that they will not bear the burden of uncontrollable increases in rental of their places of abode,'' Executive Secretary Eduardo Ermita told reporters.
For a year from the time RA 9653 takes effect, no increase will be allowed on the rent of any residential unit. After this, rent increase will be no more than seven percent each year.
The law covers all residential units in Metro Manila with a monthly rent of P1 to P10,000 and all units in urban cities with a monthly rent of P1 to P5,000.
Violators face a fine of P25,000 to P50,000, or imprisonment of one month and a day up to six months, or both.
According to the law, when a unit becomes vacant, the owner may set the initial rent for the next renter. In the case of boarding houses, dormitories, rooms, and bed spaces, no increase will be imposed more than once a year.
It also says that rent will be paid in advance within the first five days of every month, or at the beginning of the lease agreement unless the contract of lease provides for a later date of payment.
It forbids the owner from demanding more than one-month advance rent and more than two-months deposit. Any interest in the deposit will be returned to the renter at the end of the lease agreement.
If the renter fails to pay rent or utility bills or destroys house property, the deposit and interest shall be forfeited in favor of the unit owner in the amount that would cover the arrears or damages.
The law prohibits the sub-leasing of the unit without the consent of the unit owner. This, together with the failure to pay rent for three months and the owner?s need to repossess the property or make necessary repairs to make it more safe and habitable, are grounds for judicial ejection.
The renter, however, cannot be ejected on grounds that the unit has been sold or mortgaged to a third person.
The unit owner may engage the renter in a rent-to-own agreement, which will be exempt from coverage of the law.