The 40% Rule: What Foreigners Can Actually Own in the Philippines (2026)

The Philippines bars foreigners from owning land. That restriction is constitutional, not statutory, which means no law passed by Congress can fully remove it. Article XII, Section 7 of the 1987 Constitution limits land ownership to Filipino citizens and to corporations that are at least 60 percent Filipino-owned.

Republic Act No. 4726, the Condominium Act of 1966, carves out the one durable exception. It allows foreigners to own condominium units, subject to a strict cap: no more than 40 percent of the aggregate floor area or units in any single condominium project may be held by foreign nationals.

If you are buying in the Philippines as a foreigner in 2026, RA 4726 is the law that determines whether the unit you want is even legally available to you. The cap is enforced at the project level, not nationally, so a sold-out building can leave foreign buyers locked out even when the same developer has identical units a few towers over.

How RA 4726 Works in Practice

The Condominium Act treats a condominium project as a corporation. Buyers do not purchase land. They purchase a unit, which is treated as personal property, plus an undivided proportional interest in the common areas and in the land beneath the building. That interest is held through the condominium corporation, which in turn holds title to the land.

Section 5 of RA 4726 sets the structural rule. The condominium corporation that owns the land must itself be at least 60 percent Filipino-owned. Because foreign unit ownership translates into foreign shareholding in the corporation, the 60-40 ratio caps foreign-held units at 40 percent of the project.

Section 4 of the law allows the master deed of restrictions to spell out unit boundaries, rights to common areas, and assessment formulas. In practice, every legitimate condominium project in the Philippines is registered with the Department of Human Settlements and Urban Development under Presidential Decree 957, which governs subdivision and condominium project licensing.

Verifying the 40% Cap Before You Sign

Developers are required to track foreign ownership, but they are not required to publish it. A reservation agreement signed without checking the current foreign quota is a common way for buyers to lose money. If the project is already at or near 40 percent foreign ownership when the unit transfers, the Register of Deeds will refuse to issue a Condominium Certificate of Title (CCT) in the foreign buyer's name.

Three concrete steps reduce that risk:

First, request a written certification from the developer or the condominium corporation stating the current foreign ownership percentage and confirming that the unit can be transferred to a foreign buyer. This certification should be a condition precedent in the contract to sell.

Second, verify the project's HLURB or DHSUD License to Sell. The license number should appear on every marketing brochure. Foreign quota status sits in the developer's master ledger, which the corporation secretary maintains.

Third, confirm that the Register of Deeds in the city where the project sits has the project's master deed and declaration of restrictions on file. Without these, no CCT can be issued, regardless of nationality.

Bektu (https://bektu.com) tracks developer delivery history across Philippine projects so foreign buyers can verify whether the developer holding the foreign quota actually completes its towers on schedule.

Exceptions: Former Filipinos and Inheritance

RA 8179 amended the Foreign Investments Act and gave former natural-born Filipino citizens broader property rights. Under Batas Pambansa Blg. 185 and RA 8179 read together, a former Filipino citizen who has acquired foreign citizenship may purchase up to 1,000 square meters of urban land or one hectare of rural land for residential use, and three hectares of urban land or five hectares of rural land for business or commercial use.

These ceilings are per person, not per couple. A married couple where both spouses are former Filipinos may each acquire up to the limit.

Foreigners may also acquire land by hereditary succession, but only if they are legal heirs under Philippine intestate succession law (Articles 960 to 1014 of the Civil Code). Testamentary inheritance, where a Filipino leaves land to a foreigner by will, does not qualify. The Constitution overrides the will.

Townhouses, Row Houses, and the Land Question

Townhouses sold to foreigners are a frequent point of confusion. A townhouse can be sold under a condominium structure, in which case RA 4726 applies and the foreign buyer holds a CCT subject to the 40 percent cap. Many townhouse developments, however, are sold as house-and-lot packages under PD 957. In that structure, the lot is land and a foreigner cannot hold the title.

If you are looking at a townhouse and the contract refers to a Transfer Certificate of Title (TCT) rather than a CCT, the unit cannot be transferred to a foreigner in their own name. Some buyers use a Philippine corporation with 60 percent Filipino shareholders to hold title, but this introduces ongoing compliance obligations under the Anti-Dummy Law (Commonwealth Act 108) and Securities and Exchange Commission rules. The structure is real, but it is not the same as personal ownership.

Leases as an Alternative to Ownership

Foreigners can lease private land for up to 50 years, renewable once for 25 years, under Presidential Decree 471 and RA 7652 (the Investors' Lease Act). This is the standard structure for foreigners who want a freestanding house or villa rather than a condominium.

A 50+25 year lease registered with the Register of Deeds is annotated on the landowner's title and gives the lessee a real, transferable interest. Long-term leases are increasingly common in Cebu, Davao, Palawan, and Siargao for foreign buyers who want a beachfront or rural property where no condominium structure is available.

What Foreigners Actually Buy in 2026

The practical universe of property a foreigner can hold in the Philippines under their own name in 2026 narrows to four categories:

A condominium unit, subject to the 40 percent project cap and CCT issuance.

A long-term lease (up to 75 years) on land or on a house-and-lot, registered against the title.

Property acquired through legal intestate inheritance from a Filipino relative.

Land within the limits set by BP 185 and RA 8179, if the buyer is a former Filipino citizen.

Everything else, including ownership through a Filipino spouse alone, requires structures that the Anti-Dummy Law treats as criminal if used to circumvent the constitutional restriction.

Common Misreadings of the Law

The phrase "60-40 ownership" is sometimes presented as if a foreign buyer can simply hold 40 percent of a property and a Filipino partner the rest. That is not how RA 4726 works. The 60-40 ratio applies to the condominium corporation's total shareholding, not to individual units. A foreign buyer holds 100 percent of their own unit. The corporation's overall shareholding must remain 60 percent Filipino in aggregate.

Another common error is treating the foreign cap as a soft guideline. It is not. The Register of Deeds will reject a transfer that pushes the project past 40 percent, and any such transfer is voidable under Section 5 of RA 4726.

A third error is assuming all unsold units in a development are available to foreigners. Developers sometimes reserve specific floors or unit types for Filipino buyers to keep the project within the cap as it sells through. Confirming unit-level availability matters more than confirming project-level availability.