Real-estate Time Bomb Ticking for Over 1,000 Homeowners in Upscale Jerusalem

Leases to property run out in 35 years; meanwhile value is plunging.

Jerusalem's upscale Rehavia neighborhood, in which property was leased by the church in the 20th century for long periods of time.
Emil Salman

Jerusalemites living on lands leased from the Greek Orthodox Church accuse the quasi-governmental organization that holds the lease of failing to deal with the problems posed by its upcoming expiry, including the decline in the value of their property.

More than 1,000 families live on lands leased from the church by the Keren Kayemeth LeIsrael – Jewish National Fund. The 99-year lease expires in another 35 years, and after that, under a deal the church signed back in 2011, the lease will be transferred to a group of private investors.

At that point, residents are likely to lose their homes unless KKL-JNF can reach an agreement with the investors. But despite the five years that have passed, the organization has yet to even begin negotiations with the investors.

Haaretz has previously reported on two sections of Jerusalem’s Rehavia neighborhood that will face this problem even sooner – Rosh Rehavia and Gan Rehavia, where the leases expire in 18 and 19 years, respectively. Both leases will then be transferred to private Israeli investors, and the more than 100 families living there will have to either leave their homes without compensation or repurchase them from the new leaseholders at a much higher price.

But this problem pales before the much larger problem that will arise in 35 years, when the lease on additional large swaths of central Jerusalem will expire. The rights to this land, which encompasses much of the Talbiyeh and Nayot neighborhoods, will then be transferred to a group of private investors called Nayot-Kommemiyut. And this land contains over 1,000 apartments, as well as hotels and public buildings, including part of the Great Synagogue.

Nevertheless, residents of these areas have one advantage over residents of Rosh Rehavia and Gan Rehavia: The current lease is held not by individuals, but by KKL, a powerful quasi-governmental organization that could theoretically negotiate on their behalf. Yet so far, KKL has shown no interest in doing so.

As a result, property values in the area have been plunging and residents’ uncertainty is growing.

Over the past few weeks, several residents’ groups have formed to demand that KKL and the Israel Lands Authority (with which some of the residents signed their leases) take steps to solve the problem.

“We’re all in kind of a fog,” said Nayot resident Benny Steinberg, explaining that people who would like to improve or expand their apartments don’t know whether to risk doing so. “I don’t understand KKL’s behavior. They’re the ones who are supposed to be responsible for redeeming land in Israel, and we’re about to lose land in central Jerusalem.”

Shmuel Shilo, another Nayot resident, said he has no quarrel with the investors. “My complaint is against the one who’s supposed to protect us, which is the Israel Lands Authority. We’re relying on the authority to look out for the state’s interests, so that private investors don’t take over the area.”

Residents have also asked Finance Minister Moshe Kahlon to intervene in the issue, but he has yet to respond.

Residents’ anger grew after they recently discovered that the original lease gave KKL the right to extend it for another 50 years. Legal experts who have examined the documents argue that this right still exists even now that the lease has been sold. The only difference, they say, is that KKL would have to sign the extension with the private investors rather than the church.

Over the past five years, residents have repeatedly asked KKL to start negotiations with Nayot-Kommemiyut. One idea that has been raised is that KKL could pay for the new lease in part by giving the company vacant lots that KKL owns in these neighborhoods, and on which apartments could be built.

But a source familiar with the issue said that nobody at KKL wants to take responsibility for launching negotiations. Several sources said KKL’s management is afraid to do so because the last time it tried to deal with the problem, back in 2000, it fell victim to a scam: Two conmen managed to extract millions of dollars from it by pretending to have bought the lease from the Greek Patriarchate.

The Finance Ministry and the ILA both referred Haaretz’s questions to KKL.

A KKL spokesperson said the organization was “well aware of the issue,” adding, “The matter is on management’s agenda and is being dealt with. It’s important to note that the current lease ends in another 35 years, and that KKL has a legal right, anchored in its leasing agreements with the patriarchate, to extend the lease when it ends. This right of KKL’s supersedes the rights of any other party.”