Published on September 27, 2013, Malaya Business Insight:

Housing developments could grow significantly in the Philippines if not saddled by several hurdles, according to the Subdivision and Housing Developers Association (SHDA).

Topping the list of concerns of developers is the uncertainty of tax holidays for mass housing since the entitlement is approved by government on a year-to-year basis.

SHDA also complains of difficulty in accessing financing for housing projects in the lower and mid-income segments, varying and even conflicting land use policies and other issues in processing land titles, building permits and licenses for housing projects.

“All these roadblocks add to the cost which ultimately translate to higher selling prices. The housing (statistics) would certainly be better if these roadblocks are finally addressed. Only then will we see a significant reduction in the housing backlog,” said Paul Tanchi, SHDA president.

SHDA said the housing backlog of 3.9 million may increaase to 6.5 million by 2030 “if the problem is not addressed.”

Figures from the Housing and Land Use Regulatory Board (HLURB) show the industry has produced 1.88 million housing units between 2003 to 2012, of which 27 percent are in socialized housing. Jobs generated by the sector over the period stood at 513,000.

Projects registered with the Board of Investments (BOI), which benefit from income tax holiday, have a total project cost of P223 billion, 64 percent are vertical developments.

BOI-registered housing projects meanwhile have to comply with the 20-percent rule, where 20 percent of the total developments under BOI’s incentives are allocated to socialized housing.

SHDA said that while this may contribute in socialized housing development, it also discourages some developers not to register for BOI incentive.

Some developers are also not tapping incentives due to lack of awareness among developers of the tax holiday for vertical developments; project specifications are not aligned with the 51 percent residential floor area requirements per building and due to what they perceive are limited modes of socialized housing compliance.

SHDA wants to participate more in consultations in the 2014 Investment Priorities Plan to stress the economic impact and social benefit of increased housing production.

The groups said peripheral industries such as the steel and cement manufacturers, local construction, real estate and property management would also be affected by the exclusion of mass housing from government support programs.

“Afforadability is a key component of our roadmap. On top of the government subsidy, banks have become more aggressive and offer lower interest rates. As developers, we have also been pursuing increasing housing production for target segments. All the parties involved are doing their part now, so this is the right time to consider how we can keep things rolling, said Ricky Celis,” SHDA first vice president