Professional Documents
Culture Documents
88-282A
Pursuant to Section 6 of Executive Order No. 301, dated 26 July 1987, the
following uniform standards/guidelines are hereby formulated:
1.2 LESSEE. - The lessee is the party who rents the building/space.
The lessee may be a private individual, a corporation or a government
agency. If a private individual, he may personally enter into a contract
or authorize somebody, thru a special power of attorney, to represent
him. If a corporation, the representative should be duly authorized by
a resolution of the governing board. If a government agency, the head
of the agency shall be represented by the official having control of the
appropriation against which the contract shall create a charge, and the
contract shall be subject to approval by the head of the agency
concerned.
As a general rule, the duration of the lease shall not exceed one (1)
year and, as far as practicable, shall not go beyond the end of any
given calendar year.
Except for causes expressly stipulated in the contract, neither party shall have the
authority to unilaterally terminate the contract. Termination not due to causes
provided in the contract shall be mutually agreed upon.
4.1 As a general rule, rental rates are considered reasonable when they
represent or approximate the value of what the LESSEE gets in terms
of accommodation, facility and convenience from the leased
building/space, and the LESSOR gets equitable return of his capital or
investment in the construction and maintenance of the building/space.
1985
Rentals of privately owned building varies and most often is treated on a Case to Case
basis. However for purposes of illustration hereunder is one of the approaches being used by
the Building Services and Real Property Management Office in an Outline form.
DEFINITION
UNIT CONSTRUCTION COST - the estimated prevailing and/or current cost of construction
per square meter of comparable building being appraised.
DEPRECIATION - Value loss due to physical deterioration (water & tear) and Obsolescence.
REPRODUCTION COST - the estimated total cost of replacing the building new same utility.
(Sometimes called "Replacement Cost".)
CAPITALIZATION RATE - the anticipated rate of return. The two (2) elements involved are: 1)
Interest on the cost or value of the property, and 2) Recovery or Recapture of the Capital
or principal invested in the (wasting asset) property.
FACTOR VALUE - the rating factor where locations and site conditions, neighborhood data
and building structural condition, functionality, facilities and other requirements, including
free services and facilities offered by the LESSOR are considered.
RENTAL - amount paid by the National Government Agency (LESSEE) for the use and/or
occupancy of the privately owned building lot to their LESSOR, where payment is usually
on monthly basis.
MONTHLY RENTAL - Floor Area (Rentable) x Rate (per sq.m. per month.)
AREA - the total rentable area of the building in square meters being occupied by the
LESSEE.
Rentable Area implies that area of floor spaces less common areas like lobby, stairwall,
elevator hall, common comfort machine room for aircon and other area of common use
by the public or upper floor occupants.
EXAMPLE
NOTE:
Above computed rental rate applies to the regular floors, however, ground floor areas
have higher rates it being a premier floor of a building.
OUR METHODS
1. Cost land (Market Value) - the lot where the building will be erected. This includes
the open areas.
2. Cost of building and/or Equipment/money invested.
3. Recovery period of the Principal/or Machineries and other improvements.
4. Income derived from the rate of interest stabilize rate of the money invested in the
property being appraised.
5. Administrative and /or General Operating Services Expenses.
6. Real Estate Taxes.
7. Others
Appraised value of building for rent are more often treated on a Case to Case Basis
and at times depend on the building amenities and/or facilities provided free by the
LESSOR.
Savings on the part of the government. To name some are the following:
1. Electrical consumption of the Aircon system
2. Electrical consumption of lights (Office)
3. Janitorial Services and Security of the building
4. Partition the leased are based on the LESSEE’S specification and/or requirements
5. Additional parking space
6. Bigger actual floor space occupied compared to the area stipulated in the Contract
of Lease
7. Executive comfort room other than the common toilet usually situated in the lobby
8. Others beneficials to the tenant
Appraised value of buildings for rent is determine by comparative rentals of space in the
vicinity of the same building condition and/or classification. More often this method is use
to check the computed rental rate (above).