Legal Guide to Leasing Property for Foreigners in the Philippines (2025 Update)

Introduction

With its tropical islands, English-speaking communities, and growing economy, the Philippines has become a prime destination for foreign investors, retirees, and long-term visitors. However, foreigners are not permitted to own land outright under Philippine law.

That said, leasing presents a legal, flexible, and secure alternative for foreigners who want to reside in, invest in, or develop real estate in the Philippines—without breaking the law.

This guide walks you through everything you need to know about leasing property in the Philippines as a foreigner, including lease types, legal rights, contract terms, and precautions for 2025 and beyond.

1. Can Foreigners Lease Property in the Philippines?

✅ Yes — under the Civil Code and Republic Act No. 7652.

Foreigners can legally lease:

• Residential units

• Condominium units

• Houses and lots (the land, via lease)

• Commercial or agricultural land (for business purposes)

2. Legal Basis: Republic Act No. 7652 (Investor’s Lease Act)

RA 7652 allows foreign investors to lease private land for a period of up to 50 years, renewable once for an additional 25 years, provided the land will be used for:

• Investment projects

• Tourism or hospitality ventures

• Residential development for expats

In contrast, personal/residential leases (non-investment) are usually regulated under the Civil Code, allowing up to 25 years (renewable).

3. Key Leasing Options for Foreigners

4. How to Lease Property as a Foreigner: Step-by-Step

✅ Step 1: Identify Your Purpose

• Residential (e.g., long-term stay or retirement)

• Business (e.g., hotel, restaurant, BPO center)

• Real estate development (e.g., eco-resort)

✅ Step 2: Choose the Property

• Houses with land (lease land, own structure)

• Condo units (easiest and safest for expats)

• Raw land for commercial lease

✅ Step 3: Draft the Lease Agreement

Make sure it includes:

• Full names of both parties

• Property description and title details

• Lease term and renewal conditions

• Rent amount and payment schedule

• Security deposit and return conditions

• Rights and obligations of both parties

• Restrictions (e.g., subleasing, renovations)

✅ Step 4: Notarize and Register the Contract

• Contracts exceeding 12 months must be:

  • Notarized

  • Registered with the Registry of Deeds

• Registration protects your leasehold rights

5. Can a Foreigner Lease Land to Build a House?

Yes, a foreigner may lease a piece of land and build a structure (like a house or villa) on it. The foreigner owns the building, but not the land.

Important:

• The lease agreement should state that the building remains the lessee’s property.

• Upon lease expiration, the lease must specify who retains the building (lessee or lessor).

• If not specified, the building may legally revert to the landowner.

6. Key Clauses in a Lease Contract

7. Lease vs. Ownership: Pros and Cons for Foreigners

8. Common Scenarios of Leasing in the Philippines

Residential Lease

• A foreign retiree leases a lot in Cebu and builds a home.

• Lease: 25 years, renewable.

• Registered, with a clause stating building ownership.

Commercial Lease

• A foreign investor leases beachfront land in Palawan for a resort.

• Lease: 50 years, under RA 7652.

• SEC and LGU permits required.

Condo Unit Lease

• A foreign expat signs a 1-year renewable lease for a furnished condo in Makati.

• Governed by Civil Code and Condo Corporation bylaws.

9. What Happens When the Lease Expires?

• The lessee must vacate unless a renewal is agreed upon.

• If the lessee built a structure, ownership terms must be clear in the contract.

• If not renewed, and no buyback clause exists, the landowner may claim improvements.

10. Tips for Foreigners Leasing Property

• Always use a licensed lawyer to draft and review your lease.

• Register leases longer than 1 year with the Registry of Deeds.

• Avoid verbal agreements — get everything in writing.

• Check the property title to confirm ownership before signing.

• Clarify property taxes — usually paid by the lessor, but confirm this.

• Include succession plans if you plan to stay long-term (e.g., assign rights to spouse or corporation).

11. Can Corporations Lease Land for Foreign Investors?

Yes. Foreigners may incorporate a company in the Philippines and lease land in the company’s name. This is useful when:

• You want to operate a resort, hotel, or commercial center.

• The land is zoned for business use.

• The lease term needs to exceed 25 years.

Requirements:

• SEC registration

• Mayor’s permit

• Business plan submission

• 60/40 ownership rule applies for land acquisition; but not for leases

12. Sample Lease Term Structures

13. Lease Pitfalls to Avoid

Conclusion

While land ownership is off-limits for most foreigners in the Philippines, leasing remains a secure and practical path for establishing long-term residency, building a home, or launching a business.

By understanding the legal framework, structuring your lease agreement carefully, and seeking professional assistance, foreigners can enjoy long-term property use rights without violating Philippine law.

In 2025 and beyond, with property prices rising and infrastructure improving across major islands, strategic leasing is a powerful tool for expats, entrepreneurs, and retirees looking to build their future in the Philippines.