Cabinet Approves Recommendations Aimed at Easing Housing Shortage

Moves include increased property tax on rarely occupied "ghost apartments," fines on developers who delay housing construction, and funds for housing construction in Arab towns.

Moti Bassok
Ranit Nahum-Halevy
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Moti Bassok
Ranit Nahum-Halevy

The cabinet yesterday unanimously approved the Trajtenberg committee recommendations aimed at alleviating the country's housing shortage, including increased property tax on rarely occupied "ghost apartments," fines on developers who delay housing construction, and funds for housing construction in Arab towns.

The recommendations, which were made after the summer's social protest highlighted the country's housing problems, must still be passed in the Knesset to become law.

"The decision that was made today is important," said Prime Minister Benjamin Netanyahu. "It constitutes a real revolution for young couples, for couples with children and for those who need housing. Its objective is to increase the housing supply and to better distribute apartments to young couples, families and those who need apartments. This is a decision that will bring about an increase in apartment availability and a reduction in price."

There is currently a shortage of about 10,000 new homes a year, Housing and Construction Minister Ariel Atias (Shas ) said at the cabinet meeting. He said some 30,000 homes were being built every year.

Yisrael Beiteinu said it was happy with the recommendations, many of which benefit its Russian-speaking immigrant constituency. But party officials said they would not support Netanyahu's planning and construction reform in the Knesset as long as the criteria for government assistance required only one member of a couple to work. This is in keeping with demands by Shas, many of whose ultra-Orthodox constituents refuse to work.

The housing changes would cost the state NIS 1.5 billion and represent a "respectable package of benefits" for immigrants and the poor, said Tourism Minister Stas Misezhnikov of Yisrael Beiteinu.

Yisrael Beiteinu wants couples to work a minimum of 125 percent combined, meaning that both partners must work at least part-time to receive housing assistance. The cabinet approved the Trajtenberg recommendation of 100 percent employment combined.

The housing recommendations by the Trajtenberg committee, led by economist Manuel Trajtenberg, were to have been submitted to the cabinet months ago but were delayed by disputes between ministries and coalition members.

They include fining real estate developers who delay approved housing projects up to 10 percent of each home's eventual selling price. The recommendations state that some developers hold a significant amount of land in desirable areas, but are not necessarily building due to profit considerations.

Another provision would greatly increase municipal property tax (arnona ) on unoccupied homes. There are a reported 46,850 homes without occupants around the country, mainly in Tel Aviv, Haifa and Jerusalem. Many of these are apartments bought as vacation homes, which reduce the housing supply and raise rents.

The goal of the increased tax is to encourage owners to rent out their homes when they're not using them.

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

The recommendations also call for faster home development and sales and increased government housing assistance. This would include an extra NIS 160 million a year in rental assistance between 2012 and 2016; NIS 160 million more a year for building nursing homes; and funds to assist single parents and help new immigrants and the disabled buy or rent homes.

This is the fourth time the cabinet has accepted part of the Trajtenberg recommendations, Netanyahu said. He said the advice has led to "tax exemptions of thousands of shekels for working parents" and free education starting from the age of 3. "This is a government that acts," he said.