BOI eyes compromise on socialized housing

BY IRMA ISIP [ ] June 21, 2011

The Board of Investments (BOI) is poised to ease the low-cost mass housing component of vertical projects for developers to be entitled to incentives, BOI managing head Cristino Panlilio said recently.

Panlilio said that from the current 20 percent, the BOI is planning to lower to 10 percent the minimum allocation for socialized housing.

But he said the BOI bent on reducing the price of units to be deemed socialized housing from the current P3 million to P2.5 million.

Panlilio said the changes in the rules will be incorporated in the general guidelines on housing in the 2011 Investment Priorities Plan (IPP).

Panlilio said developers found the 20 percent allocation too stringent. They claimed the requirement takes away whatever incentives they are supposed to enjoy.

He added that the BOI may introduce alternative modes of compliance by allowing donation of land to non-government organizations (NGOs), which would in turn undertake the socialized housing component of the project.

Under the general guidelines of the 2010 IPP, all low-cost mass housing projects must comply with the socialized housing requirement by developing an area for socialized housing equivalent to at least 20 percent of the total subdivision area or total subdivision project cost for horizontal housing and 20 percent of the total cost of building construction and site preparation for vertical housing projects whether within or outside the same city or municipality.

Compliance may be done through any of the following modes: development of a new settlement; slum upgrading or renewal of areas for priority development either through zonal improvement programs or slum improvement and resettlement programs; and joint-venture projects with either the local government units or any of the housing agencies.

Under the proposed guidelines, Panlilio said, either the developer itself builds the socialized housing as long as it is outside the metropolitian area, or donates the land to BOI-accredited NGOs such as Gawad Kalinga, Habitat for Humanity, Angkop Pabahay, Maryville Urban Development, and the Rotary Club.

"Definitely, we will not agree to bond issuance as an alternative compliance," said Panlilio, referring to a proposal by the Subdivision and Housing Developers Association.

Panlilio said most developers, including the big ones, are able to comply with the requirements but the BOI is nonetheless looking at ways to ease the rules in the face of a debate on the hurdle cost of a low-cost mass housing unit.

In insisting on a lower hurdle cost of P3 million, the BOI said 90 percent of units sold are below P2.5 million anyway.

Panlilio said developers can afford the lower hurdle because their return on investments (ROI) is very good at 20 percent or better.

Panlilio supports the grant of income tax holidays to housing developers as these enable them to bring down the cost of a housing unit by as much as 5 percent to 10 percent.
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