Netanyahu's Cabinet Accepts Reforms for Israel Housing Crisis

PM says accepting the Trajtenberg committee recommendations will 'lower cost of living' in Israel and allow the government to 'deal with housing prices.'

Prime Minister Benjamin Netanyahu's cabinet accepted Sunday the central recommendations proposed by the Trajtenberg committee, in order to ease the country’s housing crunch.

Netanyahu spoke during his weekly cabinet meeting and said that accepting the recommendations will “lower the cost of living” and will allow the government to “deal with housing prices.” Netanyahu further said that the effort to combat rising prices would be backed up by “a series of steps, some of which would have far-reaching consequences, to increase the supply of housing.”

Emil Salman

Some of the recommendations proposed by the Trajtenberg committee include sanctions against developers that delay construction, higher municipal taxes on unoccupied homes and measures to increase the housing supply in minority communities.

Netanyahu further emphasized that this is the fourth time that the government has accepted a part of the Trajtenberg committee’s report, which he claimed has led to “tax exemptions of thousands of shekels for working parents” and the “precedent-setting decision” to provide free education for children as young as three-years-old.

“This is a government that acts. It is a government that does a lotWe are setting a worldwide agenda that deals with issues of Israel’s security. We are properly taking care of our economy and revolutionizing education.”

The Trajtenberg committee, led by Prof. Manuel Trajtenberg, was charged with finding ways to reduce Israel's high cost of living, especially for the middle class. The panel's recommendations regarding housing, a focus of last summer's social protests, were to have been submitted to the cabinet months ago but were delayed by disputes between government ministries and coalition members.

They include punishing real estate developers that delay approved residential projects. The measure, which was proposed by Prime Minister Benjamin Netanyahu and Finance Minister Yuval Steinitz, would fine foot-dragging developers by up to 10% of the home's eventual selling price.

In explaining the need for this clause, the draft states that developers hold a significant amount of land in desirable areas, but are not necessarily building due to considerations that include maximizing profit. The sanction would encourage them to build and increase the supply of homes, it states.

A handful of companies hold land worth billions of shekels. These are primarily companies that used to be owned by the state or the Histadrut labor federation and include Africa Israel, Azorim and Shikun & Binui as well as private firms such as Ashdar and Y.H. Damari that for decades have been sitting on land for tens of thousands of homes.

Another provision would greatly increase municipal property taxes (arnona ) on unoccupied homes. There are a reported 46,850 homes without occupants around the country, mainly in Tel Aviv (4,746), Haifa (3,445) and Jerusalem (3,429). The problem is usually associated with apartments purchased as vacation homes, and in addition to raising rents by effectively reducing the available housing supply it also turns some neighborhoods into ghost towns, according to the draft law. The hope is that jacking up municipal tax rates on empty homes will encourage their owners to rent them out.

The proposal also calls for encouraging construction, particularly of high-density apartment buildings, in the Arab, Druze and Circassian communities that are home to 1.5 million Israelis, about 20% of the country's population. The government would allocate funds to facilitate planning and infrastructure for these communities.

These communities need 12,000 to 13,000 new homes a year, and to the extent that demand is met, it is through individual construction of single-family homes, at a pace of about 6,000 to 7,000 a year, the draft notes.

The draft also calls for speeding up home development and sales, and increasing government housing assistance. This would include an extra NIS 160 million a year in rental assistance between 2012 and 2016; another NIS 160 million a year for building old-age homes; money to help new immigrants and the disabled buy or rent homes; and money to assist single parents.

Part of the dispute between coalition partners had related to setting criteria for government housing assistance.

Yisrael Beiteinu had demanded the reform use the original criteria recommended by the Trajtenberg committee, that couples need to work 125% - meaning, both partners would need to work at least part time - in order to be eligible. But the criterion sets 100% employment as the criteria, in keeping with pressure from Shas.

However, Yisrael Beiteinu is expected to support the reform because it now calls for allocating NIS 1 billion to assist new immigrants and the elderly.

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