Making room for change: Impact of the new Condominium Redevelopment Act
Property redevelopment involves the rehabilitation, replacement, or repurposing of existing structures on a developed site. This process is complex and often encounters points of contention.
Such is the case for condominium properties whenever stakeholders make concerted efforts to improve aging or unsafe buildings but are thwarted by a single opposing voice. This poses a challenge for condominium corporations seeking to improve the quality, structural integrity, and livability of their buildings.
Numerous benefits
The redevelopment of a condominium building offers numerous benefits. By enhancing the property’s safety, condition, and appearance, redevelopment will not only help enhance the residents’ quality of life but will also help increase the building’s market value, leading to profitable valuations and transactions. However, opposition to redevelopment efforts can hinder these benefits.
These circumstances present an opportunity for policy makers to amend the current voting requirements for the dissolution of condominium corporations, and efforts are already underway.
On May 18, the House of Representatives announced in a press release that House Bill (HB) 10173, known as the “Condominium Redevelopment Act,” was approved on its third and final reading. This bill introduces several important changes aimed at enhancing the safety and management of condominium properties.
Main aspects
A key provision under the bill grants project personnel access to units during emergencies that pose a risk to life or property, or for the upkeep of common areas.
Another significant adjustment is the reduction of the voting requirement for the dissolution of a condominium corporation in the following scenarios: (a) from 70 percent to a simple majority (over 50 percent) for buildings that are condemned or no longer usable; (b) from 100 percent to two-thirds for buildings that are 30 to 50 years old; and (c) from 100 percent to a simple majority for buildings 50 years old or more.
These amendments aim to improve the process of addressing and redeveloping aging or unsafe condominium buildings, ensuring safer and more livable communities.
Implications
The proposed bill offers relief for condominium corporations due for redevelopment but facing opposition from some stakeholders. It also provides condominium corporations with more flexibility to maximize their property’s full financial potential through a block sale to a developer.
The adjusted voting requirements rebalance the decision-making process, empowering the redefined majority while ensuring fair representation for all stakeholders. This will help efficiently guide the direction of redevelopment initiatives.
For developers, the bill offers the opportunity to refurbish older buildings with updated designs. These include alternative power sources such as solar panels, energy-efficient appliances to reduce power consumption, disaster-resilient structural features, and state-of-the-art HVAC systems to improve indoor air quality.
Essentially, the bill aims to balance interests. On one hand, it enables more efficient decision-making, allowing the majority to help steer the direction of the condominium corporation. On the other hand, it provides developers with more opportunities to acquire and enhance properties for redevelopment.
Building for tomorrow
As the proposed bill progresses, privately owned commercial buildings are already undergoing redevelopment.
In Makati City, renowned malls such as Greenbelt and Glorietta have begun closing off older sections in preparation for revitalization. This presents a prime opportunity for developers to elevate their malls by incorporating new designs that prioritize open, green spaces, fostering a more environmentally conscious carbon footprint.
Dusit Thani, another landmark within Makati City, is set to have its land lease expire in three years, paving the way for a new chapter in its life cycle.
By Marco Antonio Lozano
The author is a manager for Investment Sales at Leechiu Property Consultants Inc.
