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Build To Own Condos find an audience in the Philippines!
03/05/2008
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The Build To Own condo concept or BTO scheme has recently captured the imagination of residential and even commercial condominium buyers in the Philippines. Many property developers are implementing their projects using this Build To Own condo concept. The Build To Own condo concept is seen as a tax-efficient and innovative way to own condominiums and provides the answer to the demand for high-quality and affordable commercial and residential properties. |
The Build To Own condo concept is a co-ownership undertaking that allows condo unit buyers to acquire a unit at a significantly lower cost by directly engaging the services of a construction industry professional to develop the condominium property.
This arrangement in effect tends to reduce the cost of acquiring condominium properties since other non-project related cost are eliminated in the process.
Under the Build To Own system, each unit buyer contractually engages a construction industry professional (i.e., architectural firm, project engineer/builder, or contractor) as project proponent or organizer and provides the technical knowhow, manages and executes the development of the condominium project. For the services rendered, the project manager shall be paid a professional fee equivalent to a percentage of total construction funding contribution of each client.
The Build To Own condo system typically makes available a trust account in a bank into which the unit buyers make their deposit payments.
Deposit payments made prior to the construction of the project earn interest for the unit buyers. The trust account will provide the funds which will be used exclusively to acquire the land (which will be under the name of the project organizer in its capacity as trustee for the duration of the project) on which to build the condominium. Disbursement of funds for the construction of the project is done through the system of construction progress-based billing in accordance with the depository and disbursing agreements with the trustee-bank.
As part of the terms of the trust agreement, the trustee executes, upon completion of the project, a deed which shall convey the condominium and parking units to the respective unit buyers and the common areas of the project to the condominium corporation to be established by the owner-trustees.
Condo purchases through the traditional mode mandates that unit buyers shall pay the 12% Value Added Tax (VAT) and the Documentary Stamp Tax (DST) but not if the condominium property is acquired through a Build To Own condo arrangement.
Given the aforesaid benefits of the Build To Own condo arrangement, many can see the why this is an increasingly popular mode for developing condominium properties and providing Filipino families the opportunity to own a home at affordable cost.
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