Socialized Housing Projects Under JV Agreements

socialized-housing-projects-under-jv-agreements-1The HLURB or The Housing and Land Use Regulatory Board released a set of guidelines to govern the new manners by which real estate developers can comply with balanced housing as required by Section 18 of the Urban Development and Housing Act (UDHA) of 1992.

UDHA requires developers of residential subdivision projects to develop an area for socialized housing equivalent to at least 20 percent of the total subdivision area or total subdivision project cost. Developers may choose from any of several options on how to comply with the law, including the development of new settlements through a joint venture project of a developer with either its subsidiary company or with another developer accredited by the HLURB. This is in accordance with the issuance of HLURB Board Resolution No. 890 in October 2012.

The HLURB has implemented key reforms in the new IRR to make it easier for developers to comply with the balanced housing requirement of law taking into consideration proposals put to fore by the private sector.

Although on a particular provision under Memorandum Circular No. 6 which requires that developers of socialized housing projects applying for general accreditation must have produced at least 2,000 units, some private sectors see this as prohibitive and selective in that it may exclude many industry players with proven satisfactory track record but may not have built 2,000 units due to its resources and sheer size.

This pre-condition is viewed as something that will discourage and even eliminate small and medium developers to participate in social housing delivery.

This curtails not only the much-needed contribution to the housing stock but also the vast potential re-energized real estate activities can bring in terms of jobs, taxes and other trickle-down effects, housing being a major pump-primer and growth-driver of the economy. The more small developers are able to avail of this compliance mode, the more housing units for the marginalized will be produced.

socialized-housing-projects-under-jv-agreements-2On the alternative, a proposal that new developers be likewise allowed to participate in the compliance mode provided that any of its key officers (board of directors, president/general manager/chief executive officer, corporate secretary and corporate treasurer) have already undertaken any socialized housing development, has been suggested.

This is more or less similar or at par with the accreditation guidelines being observed by the PagIBIG Fund relative to its take-out mechanism under the developers’ contract to sell/ real estate mortgage scheme as provided for under HDMF Circular No. 259 series of 2009.

Finally, since the developer of the main subdivision project shall be liable with the developer of the socialized housing for the complete development of the compliance project irrespective of their JV agreement, the proposed qualifications above should suffice to establish the trustworthiness of the applicant-developer.

(excerpts taken from: