A Comprehensive Guide in Buying Lot in the Philippines

A Comprehensive Guide in Buying Lot in the Philippines

Owning a property is something Filipinos dream of achieving, and if you are here because you are interested in purchasing land, this article is for you. One reality of buying land is that the process will take time. Buying a lot in the Philippines is a significant undertaking, and to make the right decision, you will need to evaluate certain factors.


In comparison with purchasing an existing house, purchasing land and building a home offers much more freedom and flexibility. While buying vacant land is an excellent investment for anyone, it also comes with certain difficulties and challenges you will not experience when buying an established house. In this guide, I have included all the important steps you should take before purchasing a lot.

Factors to Consider when Buying a Lot in the Philippines

Experts in real estate advise investors to look at all the aspects involved in the process and the characteristics of the land when deciding whether or not it is worthwhile to invest in real estate. Here are the factors that will impact your land-buying decision.

1   Location and Size of Lot

When selecting a lot for your home or business, keep the real estate adage in mind: location, location, location. It's the first thing you need to consider among all factors. To find land, you need to have a general idea of where you want to buy. Then, visit online resources like Google maps to scout the area or better yet, drive around the neighborhood. 

A location that meets your needs regarding the purpose it may serve, lifestyle, convenience, and accessibility is the right choice. For emergency purposes, it is also beneficial if the property is near a medical center, fire station, and police station. If you're an investor, pick land with a resale value. If you are thinking of opening a business, avoid buying land that is completely secluded from your potential customers.

Take into account too that the Philippines has many flooding-prone cities and regions. Some are located just above or adjacent to fault lines as well. Because of this, you should exercise extreme caution when selecting your ideal property and house location.

2   Purpose of the Land to be Bought
 There are countless possibilities for land usage. Land purchase can be used for a personal residence, long-term investment, or even for starting a business. Even though zoning regulations may limit what can be built on a particular parcel of land, anything can be built on an undeveloped parcel, including hotels, houses, parking lots, and commercial buildings. Whichever purpose you have for it, it will undoubtedly impact your property acquisition decision. 

3   Budget and Financial Capabilities

Before scouting the land, evaluate how you can finance it. It is vital to take into consideration your budget while selecting a lot in the Philippines. Lots can cost hundreds of thousands to millions of pesos. When determining your budget, take into account the cash you have or can secure before buying. Moreover, you need to decide how you will pay for and insure the land after you start construction. Expert financial advice is highly recommended.

4   Full Cash Payments

Cash payments should be secure and readily available for a smooth transaction. For real estate leases and loans, make sure all the necessary documents have been signed and checked by a local lawyer. In the end, you do not want to miss out on purchasing your land because funds were mismanaged or proper documents were missing. 

5   Obtaining Property Through Loans

There are two types of loans: long-term and short-term. Regardless of how you choose to obtain funding, you should prepare to pay at least a 30%-50% down payment. For loans, Pag-IBIG and bank loans cannot be equally compared as far as funding is concerned. Everything depends on how prepared you are financially. Some people use Pag-IBIG financing due to reduced monthly amortization resulting from extended payment terms. Nonetheless, banks have been forced to lower interest rates due to competitive pressure. Furthermore, you can negotiate flexible repayment terms, interest rates, and loan amortization with your banks.


To show that you are credit-worthy, you should have all the documentation required at the time of your loan application. You usually will need to provide them with details of your annual income taxes along with your social security number, government-issued IDs, and bank statements. Make sure you don't have any other liabilities because financing institutions will always conduct background checks.

6  Citizenship

For Filipino Citizens: Philippine law expressly requires that only adults (18 years or older) could enter into contracts. However, a minor may secure real estate with their own finances, provided that a guardian is present. If you are of the right age, you must prepare government-issued ids, BIR Tax Identification Number, Proof of Income, and Proof of Billing (for those applying for loans). In addition, you must present a marriage certificate for married couples, or if there's a prenup agreement, you must also have that. For individuals who are officially separated, bring documentation of marriage's finality. Individuals who are widowed must have a death certificate. More documents may be required during the buying process, but it is always prudent to consult with a real estate agent or a lawyer.


For Foreigners: While foreigners are prohibited from buying land, they can purchase condominiums or apartments in high-rise structures as long as their share of ownership does not exceed 40%. Furthermore, they may buy their home but not the property upon which it is constructed. But they can opt for a lease. A 50-year lease on land is available, renewable for an additional 25 years.


An interested foreigner has several options for acquiring land. It is necessary to acquire land on behalf of the Filipino spouse if one is married to a Filipino citizen. While foreigners cannot buy land, inheritance is possible. Purchasing land through a corporation is another option. Foreign ownership is limited to 40% for corporations. In the case of dual citizens, Philippine Republic Act 9225 permits them to acquire land in the country without restrictions. I'll soon write a full blog post on this.

Steps on How to Buy a Lot

The following are the steps you will undertake in your quest in buying a lot in the Philippines. As long as you have all of the necessary documentation and funds, the transaction will go smoothly. The entire transaction might take at least a month, if not, longer. Also, please consider putting extra attention on the validation processes for the lot you're considering buying. 

1   Know Where to Find Lots

Locating and acquiring the perfect lot is the first step in building your dream home. Real estate agents are trusted sources for land search assistance. They can give you automated alerts when a suitable property becomes available and make sure all the steps in buying a lot are done hassle-free. However, you can also opt to do it yourself. In most cases, you can locate landowners looking to sell their properties on their own by searching for advertisements in newspapers and joining Facebook groups. 

Furthermore, there are various property portals and real estate sites that provide listings of lots for sale. MyProperty and Lamudi are all examples of sites where you can browse. It might also be worth checking with Pag-IBIG or bank institutions to see if any foreclosed properties are available after exploring all of the above options. As an alternative, you can drive to potential locations and scan the neighborhood for available lots.

On this website, Property King, you can search for properties with great efficiency. I have provided a list of the most sought-after lots and other properties around the Philippines.

2   Get In Touch With The Owner or The Property Broker
Brokers are typically licensed and work on behalf of developers to sell their properties. It is best to use a broker if you are uncertain about the processes, charges, and costs. With a broker by your side, you can streamline the entire process, including appointment scheduling and legal paperwork.

You should ask your agent for a sample computation that includes the full contract price, the deposit, the reservation fee, interest compounded monthly, and the loanable charge. Also, research the legal, ancillary, and transfer expenses incurred during the deal. If anything is unclear to you, speak with the agent.

3   Do an Ocular Visit on the Property Itself

Although it may seem basic, given how much you'll be investing, this is an important step. This stage is critical, even more so if you are not a resident of the area you wish to purchase. Visit your prospect personally, even if you're far away. Only seeing photos or videos isn't enough; you need to be sure that the property suits your needs. It is best if the property owner joins you during the ocular visit. Their knowledge of a property's boundaries and features, as well as its history and neighborly concerns, is invaluable.

4   Verify if Lot is 'Clean'

The land is a physical asset, but its ownership cannot be established only by a claim of ownership - it must be backed up by multiple documents attesting the property's ownership. By securing legal guidance, examining documents carefully, and verifying pertinent property information, the buyer can ensure that the investment is secure and clean.


In the Philippines, forged land titles and fraudulent land sales are so common that nothing is more critical than ensuring the title's authenticity and finding out whether the property has any legal restrictions. In a nutshell, you want to purchase a piece of land with a clean title. To determine if a title is authentic, verify its existence with the Registry of Deeds (RD) in the locality where the land is located. Philippine cities and provinces have their own RD, which acts as the repository for all lands within their boundaries. The Registry of Deeds is usually located in the city or municipal hall. The seller should be able to provide you with a copy of the title to obtain the title number and owner's name so that you can request a Certified True Copy of it.


A thorough background check should be conducted on the lot. Has the title been cleared? Does anyone else claim ownership of the lot? You do not want to be caught in such situations if it is not 100% clean. We recommend getting a lawyer to verify the title and deed of the property. As soon as the property is clear of any liens, mortgages, or encumbrances, you can make a reasonable offer. If the seller cannot provide the property's original title, do not buy the property from them.

5    Check Property or Road Access  

Thousands of properties all across the country do not have road access. Due to its placement among other private land and the fact that there is no access to it except to trespass on another property, it is essentially worthless. Determine access to the land or right of way. Property access is provided by two principal points - a frontage road and back access. There is an agreement between two parties in back access or a deeded access system, one of whom lacks reasonable access to his property and one who does. If a deeded access accesses your property, you should establish the terms of the agreement as soon as possible.

6    Verify Zoning Regulations Before Purchasing Land

Zoning rules establish the permitted and prohibited uses of land. If the land you plan on purchasing is subject to zoning restrictions, you may quickly run into trouble. So, make sure you do your due diligence before closing the deal.


Verify your property and our neighborhood's zoning restrictions. The Philippine government issues strict restrictions concerning land parcels (residential, commercial, industrial). Also, it would be best if you made sure there aren't any plans for developing a highway or other infrastructure across your land or the nearby area.


You may need the assistance of an experienced real estate agent if you're unsure of what questions to ask. In addition to guiding you through the process, they will also assist you in finding any information that could affect the value and potential use of the land.

7   Check Other Costs to Factor In

The purchase of the property may incur costs in amortization, tax, and down payment, so be aware of them and assess whether they are part of your budget. Among the expenditures, you'll need to factor in fees, permits, the cost of obtaining the property you require, the cost of building your home, and the cost of modifying the site to provide access to running water and other amenities (if they are not already present).


Besides the sale asking price of the property, the following transaction costs must also be paid:

  • A property transfer tax of 0.75 percent is imposed on the sales price or zone value, whichever is greater, based on the property's location.
  • Typically, title registration fees range between 0.25 percent and 0.5 percent of the sales price, depending on the fee schedule.
  • Capital Gains Tax: 6% of the agreed-upon sale price or zone value, whichever is greater. This usually falls under the seller's responsibility, but in some instances, buyers are also liable.
  • Tax on documentation stamps equal to 1.5 percent of the negotiated sales price or zone value, whichever is greater.

8    If Not Paying in Full Cash, Make a Reservation Fee or Deposit

Upon approval of the estimate, you can pay the reservation fee to the seller. Deduction of the deposit from the final contract price gives you greater assurance and additional flexibility in processing financing requirements.


Complete the necessary prerequisites for the financing option you chose. You will also be expected to complete and sign legal documents, along with providing all relevant documents. You should read everything carefully before signing anything. Verify all of the contract's clauses are understood and agreed upon.

9    If Paying in Full Cash, Close the Deal

A notary public must acknowledge the sale receipt and deed of sale if you choose to pay cash on the spot. You should complete a Contract to Sell and an Acknowledgement of Receipt if you and the seller agree to pay in installments. A lawyer may also provide you with additional documents.

10   Undergo the Legal Process of Transferring Ownership

1)  A lawyer will prepare and notarize a deed of absolute sale (DOAS) once the buyer and seller have settled on the land sale.

2) You will need to obtain a Land Tax Declaration from the Bureau of Internal Revenue (BIR) and submit it to a city or municipal assessor's office.

3)  It is the buyer's responsibility to pay the tax to the City Treasurer's Office.

4)  Assessors determine what the market value of a property is.

5)  Payment of transfer taxes is the responsibility of the buyer to the Assessor's office.

6)  Stamp Taxes and Capital Gains Taxes are paid to the Bureau of Internal Revenue.

7)  The title will be revoked by the Registry of Deeds (RD), and a new one issued in the buyer's name.

8)  The buyer or new owner receives a duplicate of the new title, and the Assessor's office issues a tax declaration.

More Land Buying Tips to Make Your Purchase Easier. 

If you're looking to acquire a piece of real estate, you should look for one that has good building potential. You must factor in extra excavation and foundation expenses if the site is sloped. Also, have someone do a ground inspection. Rock breakers cost even more. Check if the lot is part of a sinking place. It's not advisable for such lots since they have detrimental effects on the foundation and overall stability of whatever you're planning to build on it.

When buying land, it is important to consider the location of existing trees. Especially in storm-prone areas, you need to consider the damage a falling branch or an entire tree could do to your home. Likewise, removing a tree is not a straightforward process. Illegal tree removal can result in heavy fines, so make sure you plan accordingly. You can find guidance on tree removal and restrictions from your local municipality.
Check the lot's orientation. Who wouldn't want a stunning view? Be sure to consider any easements, roads, or driveways, as well as the proximity to any existing or future structures.

Undeveloped land must be inspected for existing utility connections and the companies that can connect your water, gas, and electrical. What would the costs be if there were no connections?

Taxes are due on land, whether or not you build on it. Ensure you understand what taxes to expect and how much it will cost you before purchasing land so that you can make an informed purchase decision.

Land purchasers should always obtain a new survey prior to closing a deal to clear any doubts about the boundary of your prospect purchase. An old survey submitted by the seller is not enough. Obtaining a recent survey will enable you to determine the lot's clear and current borders.

Check whether annual real estate taxes are paid. Verify that the current real estate taxes are on file by requesting copies of the Tax Receipts and Tax Declarations.
 It’s not advisable to buy a lot without a title. If the seller can only present tax declarations, there might be a chance in the future that a claimant can take the rights of ownership from you. If you are persistent in buying tax-declared lots, you can work with a broker or an attorney.

Ramon "RK" King III — With more than 12 years experience in the Real Estate Industry. Awarded as 2020 Best Trainer by JCI Philippines.

Now, You're Ready to Purchase Your First Lot in the Philippines.

Investing in land is a serious decision that should be made with care and diligence. It can easily become a legal nightmare or a money pit without proper research or due diligence. You should keep this list handy so that you can check each step of the land purchase process.


To buy a lot in the Philippines with less stress, buying it from a developer and real estate agent is your best bet. Your agent acts as an expert negotiator on your behalf. A broker with this experience usually sells various lots to find one that fits your budget and lifestyle. Make sure, however, that the agent is a licensed real estate broker. Feel free to contact me ! Property King is ready to help you navigate the ins and outs of buying a lot in the Philippines.   

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