Home › Business kits › Personal and home services
An apartment building needs a sanitary permit from the local health office before you open units to tenants. If your rents fall under the Rent Control Act, you may ask for at most 1 month advance rent and 2 months deposit, and the deposit is kept in a bank. Owners often miss the tax side: a residential unit renting for ₱15,000 a month or less is VAT-exempt.[1,2,3]
Is your unit covered by rent control?
RA 9653 covers residential units renting from ₱1 to ₱10,000 a month in NCR and highly urbanized cities, and ₱1 to ₱5,000 elsewhere, as of the Act's 2009 effectivity. Later extensions are set by HUDCC or DHSUD.[2]
Those 2009 numbers may not be today's ceiling. Before you print a lease, ask DHSUD which ceiling and yearly increase apply now, since later DHSUD resolutions may have changed them.
Deposits and advance rent
For covered units, the lessor may demand at most 1 month advance rent and 2 months deposit, and the deposit must be kept in a bank.[2]
A separate bank account for deposits makes it easy to show where each tenant's money is and to return it at move-out. Write the deposit amount and the return terms in the contract.
VAT, units and your BIR registration
Lease of a residential unit with monthly rent not over ₱15,000 is VAT-exempt under NIRC Sec. 109(1)(Q), as amended by the TRAIN Law.[3]
If some units rent above that, read the VAT threshold guide and percentage tax before you register with BIR.
Questions people ask
- How much deposit can I ask from a tenant?
- For units covered by RA 9653, the most is 1 month advance rent and 2 months deposit, with the deposit kept in a bank.
- Do I need a sanitary permit for a small paupahan?
- PD 856 Sec. 63 covers apartments and tenement houses among places that need a sanitary permit before opening to the public. The fee is set by your city or municipal ordinance.
- Is my rental income VAT-exempt?
- Rent from a residential unit at ₱15,000 a month or less is VAT-exempt under the NIRC as amended by TRAIN.
- Can I raise the rent anytime?
- The yearly increase allowed after 2013 was set by later HUDCC and DHSUD resolutions that we have not opened. Check the current rule with DHSUD before you raise rent on a covered unit.
Before you rent out your first unit
- List each unit with its planned monthly rent.
- Check each rent against the rent control ceiling with DHSUD.
- Mark which units are at ₱15,000 a month or less for VAT purposes.
- Open a bank account just for tenant deposits.
- Prepare a written lease with rent, deposit, advance and house rules.
- Book the health office inspection for your sanitary permit.
- Set up a rent ledger with payment dates for each tenant.
Sources
Checked 13 November 2026. We link the agency's own page for every requirement. Rules change; confirm with the office before you pay.
- Presidential Decree No. 856 (Code on Sanitation of the Philippines) · Office of the President (via Lawphil) · 23 December 1975
- Republic Act No. 9653 (Rent Control Act of 2009) · Congress of the Philippines (via Lawphil) · 14 July 2009
- Republic Act No. 10963 (TRAIN Law) · Congress of the Philippines (via Lawphil) · 19 December 2017
The extra permits, in one table
| Permit or registration | Agency | When it applies | Fee |
|---|---|---|---|
| Sanitary permit for hotel/lodging/boarding/apartment establishment[1] | DOH / local health office (PD 856) | always | assessed by the city or town (no national amount) |
| VAT exemption for residential lease up to PHP 15,000/month[3] | BIR | if monthly rent per unit does not exceed PHP 15,000 | Not published |