THE Chamber of Real Estate and Builders’ Associations Inc. (CREBA) has raised concerns over a new Department of Human Settlements and Urban Development (DHSUD) rule requiring payments collected during the pre-selling of housing units under a temporary license to be placed in escrow.
CREBA warned that restricting developers’ access to buyers’ payments could disrupt project financing and ultimately delay housing construction, particularly in the mass and affordable housing segments.
Under DHSUD Department Circular No. 2026-12, a developer may be issued a Temporary License to Sell (TLS), allowing it to begin pre-selling while awaiting regulatory permits from agencies other than the DHSUD.
The circular, however, requires proceeds from pre-selling under the TLS to be deposited in escrow to ensure that amounts paid by buyers can be refunded should the developer fail to subsequently secure a regular License to Sell.
CREBA warned that locking up the proceeds could undermine one of the real estate industry’s mechanisms for financing construction, particularly for mass and affordable housing projects where developers operate on tighter margins and depend heavily on cash flow during the pre-selling stage.
Pre-selling involves offering housing units to buyers before construction is completed or the units are ready for occupancy.
Buyers are typically offered lower prices compared with ready-for-occupancy units, along with flexible payment terms and an opportunity to choose units earlier in the development.
For developers, CREBA President Noel ‘Toti’ Cariño said pre-selling provides liquidity to supplement capital already committed to a project and helps replenish investments made before units are sold.
These sunk investments include expenditures for land acquisition, planning and design, surveys, permits, professional fees, site preparation, financing and other pre-development costs.
Cariño said that while pre-selling proceeds cannot finance an entire development, they can help accelerate project completion by easing cash-flow pressures and allowing developers to recycle working capital into ongoing construction and the development of facilities and amenities.
‘Every peso legitimately returned to the project’s development cycle can help move a project faster toward completion,’ Cariño said.
He warned that requiring all pre-selling proceeds to remain in escrow could constrict developers’ liquidity, particularly during periods of tight capital and high interest rates, potentially slowing completion of housing units already paid for by buyers.
Cariño said the TLS framework should be redesigned not merely to allow developers to begin selling but also to help accelerate housing development while protecting homebuyers.
‘A better mechanism would permit the controlled and progressive release of escrow funds exclusively for the same project, tied to independently verified construction milestones, engineering accomplishment and strict bank and DHSUD monitoring,’ Cariño said.
‘The objective should be simple: protect the buyer, safeguard the funds, but allow those funds-under strict controls-to help build the very homes for which the buyers paid,’ he added.