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On December 23, 2018, the Israeli ministerial committee approved a draft bill on the subject of real-estate purchasing groups. This draft bill is designed, on the one hand, to protect members of purchasing groups and, on the other hand, to enable their continued existence as a means to construct residential apartments while cutting costs.
The Law for Reducing the Use of Cash, which is scheduled to come into effect on January 1, 2019, will have a significant impact on the real-estate sector.
The Ministry of Construction and Housing recently published a memorandum of law that prescribes a payment schedule for the first time that is specifically defined for urban renewal projects involving the addition of new apartments to existing buildings.
The Supervisor of Land Registration at the Ministry of Justice accepted a lawsuit filed by the housing committee of a condominium building in Tel Aviv and forbade one of the apartment owners from using his apartment for short-terms rentals (Airbnb, Booking).
The Israel Tax Authority (ITA) recently launched an application that allows anyone who previously executed a real-estate transaction to check whether he or she has a credit balance in respect of an overpayment of betterment tax or purchase tax.
In July 2018, the Israeli Knesset approved a draft bill in a second and third reading that addresses the obligation of apartment owners seeking to sell a property as a result of a general outline plan to pay land betterment tax.
According to a ruling handed down recently by the Israeli Supreme Court, when a real estate asset is sold before the seller enters bankruptcy proceedings, and the seller has not paid the betterment tax, the local council is not obligated to grant the buyer approval for registering the property under his name. Thus, the buyer will be required to pay the betterment tax.
The Israel Tax Authority (ITA) recently published a draft circular for public comment on the issue of classifying residential rent income. The ITA states that, according to its reasoning, income from the leasing of 10 or more apartments should be deemed business income.
In July 2017, the Fair Rent Law was enacted, an initiative of MPs Stav Shaffir and Roy Folkman. The main objectives of the New Law are to regulate the relationship between tenants and landlords and to define the minimum conditions for an apartment to be deemed “fit for dwelling.”
The Urban Renewal Law, which was promulgated at the beginning of April 2017, is attempting to regulate the phenomenon of obtaining apartment-owners’ signatures on undertakings towards developers and/or various entities (organizers) that are supposedly promoting urban renewal projects.
The new law prescribes that, as of January 1, 2017, every taxpayer must pay tax annually (January through December) for every residential apartment that he owns in excess of two apartments, at the sum defined pursuant to the provisions of the law. The taxpayer will be allowed to choose which of his apartments he deems to be his first two apartments, and which shall be taxable under this law.
A Supreme Court judgment handed down in December by the Honorable Justice Yoram Danziger ruled that the demand by local planning and building committees that deeds of indemnity be signed is illegal (Bikel Flowers Ltd. vs. the Local Planning and Building Committee – Rishon Letsiyon).
In March 2016 the government adopted the housing cabinet’s recommendations regarding criteria for allowing foreign construction companies to begin operating in Israel. This move is one of the government’s strategies for increasing the volume of residential construction in Israel.
Developers can no longer rely on changes to an apartment, requested by the purchaser, as reason to avoid payment of compensation for late delivery. This was ruled recently by the Supreme Court in a case involving a dispute between purchasers of an apartment and a contracting company. The Sale (Apartments) Law states that a delay of over 60 days from the date specified in the sale contract for the delivery of the apartment to the purchaser, means that the purchaser will be entitled to compensation without proof of damage, and this from the first day of delay. In the abovementioned case, the sale contract which was signed by the purchasers and the contracting company stated that any request to change or supplement the apartment will postpone the delivery date of the apartment for at least 60 days. It should be noted that clauses of this nature are common and appear in almost every sale contract from a contractor. The Supreme Court ruled that the wording of the relevant clause is broad and vague, and gives the contractor unlimited options to determine the date of delivery, which creates uncertainty among the purchasers. Thus, the contractor prevents the purchasers from preparing themselves for a new and clear date on which the apartment will be delivered to them, and to plan their moves accordingly. The Court further ruled that from now on, the contractor cannot rely on sweeping clauses in apartment sale contracts, which include provisions exempting him from paying compensation for delays in delivery of apartments, in any case where changes to the apartment were ordered by the purchasers. However, the Court held that the parties can agree, for example, on a new and concrete postponed delivery date, in the case of making changes in the apartment at the request of the purchaser, in a later agreement signed by the parties. The Court also noted that a new and postponed delivery date that will be determined by agreement, as mentioned, may be examined by the Court, in terms of its reasonableness in relation to the scope of changes made to the apartment and their nature.
The Israeli Tax Authority (ITA) recently announced, during a discussion of the parliamentary committee, that it is about to publish a tax circular in the matter of renting apartments for a short periods of time, including through Internet platforms such as Airbnb. According to recently released data, In 2015 about 128,000 tourists visiting Israel rented apartments through Airbnb. This represents an increase of 45% compared to 2014, as well as an increase of 40% in the number of Israelis who offer their apartments for rent through Airbnb, which is now over 13,000.
Amendment 101 to the Building and Planning Law was promulgated in April 2015. The amendment concerns a transfer and expansion of authorities to the local committees and sweeping amendments designed to shorten, streamline and simplify construction licensing.Following is a brief review of the amendments, which shall come into effect on January 1, 2016. Three construction licensing tracks were defined:Structures exempt from a permit requirement – light-weight structures, such as storage sheds, pergolas, awnings, fences, winter-time enclosures and more (this amendment came into effect at the beginning of August).Fast-track permits – structures (to be defined by the Minister) that are unlikely to pose a substantive hazard or disturbance, or to have a material impact on the appearance of the building, on the environment or on their character or characteristics. This track relates to building additions, such as apartment protected spaces, porches, small rooms of up to 25 square meters, elevators, enclosures of open pillared storeys, and more. Standard-track permits – the amendments relating to fast-track permits will come into effect on January 1, 2016, which shorten the waiting time until the authority must issue its response to 45 workdays. In cases whereby a response is not issued, then the permit application shall be deemed an approved permit. According to the amendments relating to standard-track permits, if a permit is not issued after 90 workdays, the applicant may file an appeal to a district appeals committee authorized to issue the permit.The law specifies the work stages, procedures and timeframes for the issuance of construction permits, completion certificates / Form 4 / use and occupancy permits. External planning and building control and inspection institutes are to be establishedThe main objectives of setting up external institutes are to centralize all approval authorities (municipality and local committees) and professional controllers and inspectors in a one-stop format. The amendment prescribes provisions regarding the establishment and accreditation of authorized control and inspection institutes, and defines roles: design controllers, who are responsible for verifying that the permit complies with the building code provisions addressing the building’s stability and safety and suitability for use; and construction inspectors, who are responsible for verifying that construction is being executed in compliance with the building code.Online permits – the legislation includes instructions for filing online applications for building permits.Affordable housing – besides the issue of licensing, another section of Amendment 101, which addresses the issue of affordable housing, Addendum Six to the Planning and Building Law comes into effect on January 1, 2016. Inter alia, the amendment authorizes local committees to approve plans for adding construction lots and for adding public uses, including rental housing, which will apply to buildings and lots defined in plans as being intended for affordable housing. Update about planning and building amendments anticipated in theproposed State Budget for 2015-16, which was approved by the government on August 6, 2015As part of the efforts to resolve the housing crisis, a number of additional legislative amendments have been proposed in resolutions of the Israel Land Council and in National Outline Plan 35 that relate to planning and infrastructure and real-estate registration. The purpose of the amendments is to increase the supply of apartments in the market by removing barriers and by accelerating the pace of land development and the planning and construction of apartments.Briefly, these amendments include: increasing the number of local planning committees and expanding their authorities, streamlining of parcelization and partitioning procedures, accelerating the construction and marketing of State lands, government funding for the planning of privately-owned housing complexes, lowering of infrastructure barriers, encouraging development agreements between local authorities and entrepreneurs, building permit exemptions for particular types of national infrastructure works, uniform primary legislation on the subject of development permits in local authorities and converting buildings currently deemed under nonconforming use to apartments for residential use.