Israeli Finance Minister Avigdor Liberman joined Housing and Construction Minister Ze’ev Elkin and Interior Minister Ayelet Shaked on Sunday to present a 17-point plan designed to lower prices and enhance the economy – but the plan includes:
- a tax hike on investors,
- an increase in the purchase tax on apartments from the current 5 percent to 8 eight percent,
- a shutdown on Airbnb apartments and other vacation properties in central Israel,
- a green light for approval of “evacuate and build” projects from only 66 percent of apartment owners in the building, instead of the current 80 percent majority, and
- a reduction in the legal maximum amount of cash that can be used in transactions.
The “evacuate and build” amendment includes a clause stating that approval of just 50 percent of the building’s apartment owners might be enough, because apartment owners who infringe on building regulations are not included in the count. The developer can sue an apartment owner who refuses the project, and the approving majority can sue the minority owners who refuse to go along. Moreover, the holdout owners can be made to compensate the other owners for their financial loss, according to Globes.
Israeli housing prices have soared by nearly ten percent (9.2 percent) in the past year alone, according to the Central Bureau of Statistics. They have doubled in the past decade.
Government incentives are being focused primarily on those who are either buying or selling houses, with almost no assistance to those who have never had the opportunity to buy due to their economic status.
The Meir La’Matara plan advanced by the government after it took office in June, offers discounts of up to NIS 300,000 on new apartments for young couples.
Encouragement to build on private land by reducing the improvement tax from 47 percent to 25 percent over the next four years is likewise a boon to a very narrow population: how many average Israelis can actually afford to BUY private land, and then also afford to build a new home?
A plan to convert office buildings into residential projects means the contractors have the right to kick out medical and dental clinics which often rent spaces in those buildings, sometimes leaving whole neighborhoods without essential services.
“There are some factors that we have no control over, such as the prime interest rate in the US and the rising cost of building supplies,” Liberman told reporters on Sunday morning before the cabinet meeting. “But we can improve other factors,” he said.
This past week, the 2021 and 2022 Budget Laws were approved by the Knesset Finance Committee for their second and third readings in the Knesset plenum.
Committee chair Alex Kushnir was quoted by Globes as saying the budget includes “many clauses alongside the Economic Arrangements Law, which has very many reforms.”
Among those reforms was a bill to raise the retirement age for women in Israel from 62 to 65, over the next 11 years. The current retirement age for men in 67.
Another was a plan to recruit some 5,000 foreign tech workers, which has seen fierce opposition by those who are affected most — junior staff hoping to move up the ladder and Israeli students approaching graduation.