What is the RESA Law and why must it be changed?

Without a doubt, real estate is a key pillar of the Philippine economy. A P760-billion industry, the country’s future prosperity relies on the healthy performance of the real estate market. Moreover, more than half of the P1.6 trillion in OFW remittances, another major economic contributor, is used to invest in real estate.

The most pressing issue in Philippine real estate is the growing 6.75-million-unit housing backlog, suggesting that there are an estimated 21.3 million, or 1 in 5 Filipinos without decent or formal housing. Even more alarming are the estimates from industry experts that the backlog will balloon to 22 million units by 2040 if not addressed today.

While on the surface it may seem that the market is dominated by top developers who only cater to the upper-middle income bracket and above, the reality is that there are hundreds of real estate firms in the country with the means and the intent to provide for socialized and low-cost housing.

So what is the real problem that is aggravating the housing backlog?

It is the restrictive national policy that is bogging down local real estate entrepreneurs.

Republic Act No. 9646, otherwise known as the Real Estate Service Act of 2009 (RESA), is an antiquated and ineffective policy that sought to regulate Filipino real estate practitioners so that they may become “globally competitive.”

But after 10 years of implementation, the industry has come to understand that it is an inherently flawed bill. It has put up a monumental barrier for entry for many aspiring real estate entrepreneurs.

Real estate entrepreneurs are the market touchpoints for developers. They provide on-ground insight into the market’s demands. Depriving developers of such insight prevents them from expanding to the under-served corners of the Philippines, and in the process, continues to deprive millions of Filipinos of owning a home.

The consequences of RESA Law’s passing have led to the development of a real estate market that is anti-poor, anti-Filipino, and anti-progress.

1) World’s most expensive, prohibitive certification process.

Article III of the RESA Law requires a Professional Regulation Commission (PRC) licensure examination for those who aspire to become a real estate entrepreneur outside of salespersons, and a subsequent registration with the Housing and Land Use Regulatory Board (HLURB). Section 14 states that to qualify for this process, applicants must hold a Bachelor of Science in Real Estate Management (BSREM).

None of the successful real estate models in the world have such a requirement, like Singapore or the US, and yet here in the Philippines, we require practitioners to pay for a full four-year course to enter the profession. These courses average around P300,000 for the tuition alone to complete, even more in some cases.

What’s more, RESA states that there must be a 1 is to 20 ratio of brokers to salespersons. Salespersons must become accredited by the PRC before they are able to officially practice, a process that some report to take longer than 2 years. For many, this means more than two years where an aspiring salesperson remains unprotected from abusive and malicious brokers who hold commission hostage.

2) Preferential treatment of foreigners over Pinoys

The 1 is to 20 rule for brokers to salespersons only applies to local firms, meaning none of the foreign companies operating in the Philippines are subject to such a restriction. At a time where the job market is as competitive as it is, the law favors foreign “alien” agents over Filipinos.

Even more concerning is that the lack of regulation of these foreigners has bred several informal and irregular practices in the real estate market that remain to be unseen by regulators.

Including real estate brokers, assessors, consultants, and salespersons, there are currently 100,000 to 300,000 Filipino real estate practitioners in the country, and that is not even counting those who wish to become one or those who have chosen not to renew their certification. The law must change to favor our fellow Pinoys and ensure their livelihoods.

3) Anti-technology, anti-progress

Despite the shortcomings of this law and the inconsistencies in its implementation, innovative Filipino firms have begun leveraging technology to create solutions that overcome the challenges while staying within the legal boundaries.

And yet, because of skepticism and conflicting interests, many of these revolutionary ideas are aggressively shot down before they have a chance to make a positive impact on the industry.

The RESA law was drafted over a decade ago and failed to consider the evolving technological landscape of the market, and must be updated to meet the changing needs.

So what can be done to fix this broken law?

We, the movement for A Better Real Estate Philippines, aim to amend Republic Act 9646 so that it addresses the following 7 points:

1) Create a national real estate commission - to serve as the sole regulatory body to ensure the goal of the professionalization of individuals who wish to join the real estate service community.  PRC should continue to license brokers, but the real estate commission will be responsible for registering and providing jobs for salespersons. This will also encourage licensing to be expedited and we recommend that licenses be released on the same day of application. A one-day release of the ID will help provide more jobs and opportunities for entrepreneurs.

2) BSREM should be made as an optional course - remove the mandatory four-year BSREM course as a requirement for licensing of new brokers and appraisers as it is impractical, irrelevant, and onerous.

3) Create opportunities for more real estate entrepreneurs - remove the limitations as to the number of agents per broker to allow for growth and opportunity for those who wish to join the real estate sales force.

4) Relegate training to real estate agencies - relegate seminars/training to real estate agencies similar to that of the insurance industry in order to prevent the abuse of seminar providers from making cash cows out of brokers and salespeople.

5) Eliminate double or extraneous assessments - Override Presidential Decree 957 with a new decree to eliminate double or extraneous assessments to real estate sellers.

6) Expand the scope of the real estate profession - expand the scope of real estate sellers to include high school graduates of legal age as sales referrers to provide livelihoods to as many Filipinos: and expand the scope of the real estate service profession to include property managers, building administrators, and other professions directly related to real estate.

7) Establish equal protection for local real estate entrepreneurs - provide for protection and benefits to duly licensed real estate sellers to ensure they are afforded the same opportunities as foreign sellers.

Let us unite and sign this petition to protect local real estate entrepreneurs and address the housing backlog, make the industry more inclusive, recognize the contributions of real estate entrepreneurs to the country’s growth, and promote better real estate for the Philippines. For more updates on this legislative advocacy, you may join us at:

https://www.facebook.com/groups/abetterrealestatephilippines/

This petition was created by A Better Real Estate Philippines, a movement that seeks to make improve local real estate by making the industry more inclusive and promoting the use of technology and innovation.

#ABetterRealEstatePhilippines

#MovementForChange

#ResaAdvocates

#AmendResa9646

#ProudAhente