Real estate group warns escrow rule could delay housing projects

CEBU, Philippines — The Philippine real estate industry is urging the government to reconsider new licensing rules requiring developers to place buyer payments in escrow, warning that the measure could restrict access to working capital, delay housing projects and discourage private investment.

The Chamber of Real Estate and Builders’ Associations Inc. (CREBA) said the requirement under the Department of Human Settlements and Urban Development’s (DHSUD) revised guidelines on temporary licenses to sell (TLS) could disrupt the financing arrangements developers rely on to move projects from planning to construction.

CREBA president Noel Toti Cariño described the condition as impractical, arguing that developers have already committed substantial capital to land acquisition, permits, architectural plans and other pre-development expenses before applying for authority to sell.

“When you apply for a license to sell, it means you are already committed to the project,” Cariño said, questioning how developers could accelerate construction if payments collected from buyers were inaccessible.

Under DHSUD Department Circular No. 2026-012, dated July 22, 2026, qualified developers may obtain a Temporary License to Sell (TLS) while completing specified regulatory and documentary requirements for subdivision, condominium and similar developments.

However, all payments collected from buyers under the temporary authority must be deposited in an escrow account established through an agreement involving the developer, DHSUD and an accredited bank.

The funds cannot be withdrawn or used by developers until the department authorizes their release after the prescribed conditions have been met.

The temporary license is valid for one year, with a possible final extension of up to six months on justifiable grounds and subject to regulatory approval. Developers that fail to secure a regular License to Sell (LTS) within the prescribed period may be ordered to refund buyers within 30 days of the issuance of the refund order.

The circular also requires developers to submit monthly reports on sales and project operations, while banks must provide regular statements of escrow accounts to the concerned DHSUD regional offices.

Licensing bottlenecks raise industry concerns

CREBA’s objections come amid an estimated 82 percent decline in LTS issued to developers, according to figures cited by industry representatives.

Cariño urged the government to examine the underlying data, noting that while regulators are justified in withholding licenses from developers with incomplete applications, broader restrictions could also affect companies that have already made substantial investments and are complying with regulatory requirements.

The association has formally communicated its concerns to the government and is awaiting a response. It has also brought the matter to its legislative conference, seeking further discussions with DHSUD.

CREBA has separately raised concerns about the centralization of license-to-sell processing, which previously reduced the authority of regional offices to evaluate and act on applications.

Cariño welcomed the restoration of processing responsibilities to regional offices, saying decentralization could improve administrative efficiency and shorten approval times.

For developers, the combination of tighter escrow requirements and slower licensing processes could have implications beyond compliance costs. Restricted access to pre-selling proceeds may increase dependence on bank financing and other sources of capital, potentially affecting project timelines and the pace of new housing supply.

CREBA said it would continue engaging with the housing department and other government agencies to seek a regulatory framework that safeguards buyers while allowing developers to mobilize capital and deliver projects.

The broader challenge for policymakers is to strengthen consumer protection without undermining the financing mechanisms and private investment needed to expand the country’s housing stock.