Rent Control? Not in Israel

The issue of rent control was one of the most pressing during the social protests of 2011. Despite some attempts by Israeli MKs, not much has changed.

During the first week of July 2011, Daphni Leef posted an event in Facebook. Under the heading "Emergency situation - take a tent and make a point," she announced that she would erect a tent in Tel Aviv's Habima square on the night of July 14 to protest housing prices. An array of reasons brought hundreds of thousands of Israelis to participate in social protest demonstrations that summer, and the scarcity of housing - the destruction of the dream of owning an apartment and rental prices that don't stop rising - was one of the leading reasons.

Several MKs presented bills in the last Knesset aimed at controling rent. The government opposed all of them, for a mixture of practical and ideological reasons according to which free market forces should not be interfered with, even if their faults are obvious to all. For supporters of the capitalist approach, the very idea of controling rental prices borders on abomination.

However, such control, in various versions, has existed for many years in countries such as the United States (including in New York and Los Angeles ), Canada, the Netherlands and France - not exactly maligned centers of communism. A report by the Knesset's Research and Information Center a few years ago noted that legislation in most countries places limits on landlords - for example, regarding the possibility of truncating the rental period - designed to "prevent a situation whereby landlords evict existing tenants, who pay controlled rent, in order to bring in new tenants who could be charged a higher rent."

According to past assessments, based mainly on websites that publicize apartments for rent, rental prices have jumped by tens of percent in the past five years, a trend that is continuing today.

The most determined Knesset member on this issue is Shlomo Molla (Kadima ), who continued to present the same bill, despite it being rejected every time by the coalition. Molla's bill has two main components: a ban on raising rent within a year of signing a contract, and limiting such hikes to the cost-of-living index plus five percent.

"In Israel it is accepted practice to assume that there is no interference in the rental market in developed countries, but in practice Israel is one of the few countries in the developed world that does not concern itself with rental conditions, prices or the frequency of price rises," reads the bill's preamble. The bill was rejected three times, the last being on November 2, 2011. Three days later Molla tabled the bill for the fourth time, together with the three Meretz MKs Nitzan Horowitz, Zahava Gal-On and Ilan Gilon.

In opposition to the bill, Justice Minister Yaakov Neeman said: "I have to tell you, respected Knesset members, that this bill puts an unreasonable limitation on the freedom to willfully enter a contract and harms ownership rights in an unreasonable manner. I want to emphasize: Every interference in the market ultimately harms the weak population. The government is striving to take various steps to promote accessible housing, which will bring about an easing of this issue [more] than this bill."

Neeman was referring to a series of tenders published by the Housing and Construction Ministry to market plots across the country. In some of the tenders, the winner will be obliged to maintain controled rental prices for up to 10 years. The Housing Ministry is convinced that this will solve the dearth of rental apartments.

Other observers believe in this solution far less, partially because the percentage of apartments intended for controled rent is insignificant.

Alon Ron