The plan for addressing the housing crisis that Prime Minister Benjamin Netanyahu presented yesterday should be divided into two parts. The first part discussed the main reason for the increase in housing prices: the shortage of land for construction.
There are two reasons for this shortage. The first is that a government monopoly, the Israel Lands Administration, holds 93 percent of Israel's land and doesn't release enough of it. The second is that the regional planning and building committees delay the issuance of building permits with endless bureaucracy, which further increases the shortage and sends prices even higher.
The prime minister is trying to deal with both these problems. The Knesset is already considering a bill to reform the ILA by turning it into a "lands authority" that would flood the country with land. A bill has also been submitted to get rid of the red tape created by the planning and building committees, by bypassing them via national housing committees that would accelerate approval of construction plans. The Knesset ought to approve both bills before it goes on recess next week.
Yesterday, Netanyahu unveiled four new proposals designed to lower housing prices for specific population groups, such as students, young couples and demobilized soldiers.
One proposal would offer these groups a 50 percent discount on the price for land as long as the plot does not exceed a certain size. Another seeks to create rental housing by giving developers a discount on the price of the land. A third is to have universities and colleges build student housing on land that the government would grant them free of charge so that rents will be low. Finally, the government proposes giving students a 50 percent discount on bus and train fares.
The problem is that these proposals will not lower the price of housing for all those who lack it. At best, they may improve the situation of several thousand students and young couples. Nor is there any guarantee that these plans will even be implemented, since the gap between talk and implementation is often great, especially with the present government.
That is why the emphasis should be placed on the two significant changes: reforming the ILA and establishing national housing committees. If they are implemented, the supply of land will increase. And then there will be a real drop in housing prices for the entire public.
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