Knesset Panel Backs Regulations to Double Tax on Empty Apartments

Measure submitted by finance and interior ministers would double municipal property taxes on 'ghost’ apartments left empty nine months of year to encourage absentee owners to rent out apartments.

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The Knesset Finance Committee approved on Monday regulations to levy double the rate of municipal property taxes (arnona) on apartments left empty nine months per year.

The regulations were submitted by Interior Minister Gideon Sa’ar and Finance Minister Yair Lapid and will be enacted on a temporary basis of two years, during which their implementation and effect on the housing market will be examined. They will allow municipalities that decide to implement them to make exceptions in individual circumstances.

“The regulations approved in the Finance Committee were an additional step in increasing the supply of apartments in Israel,” said Lapid following the committee decision. “I will continue to work in every possible way to solve the housing crisis and make things easier for the Israeli middle class.”

“The housing crisis mandates taking every step possible to increase the supply of apartments in the market, whether for rent or for sale,” said Sa’ar.

Based on figures submitted to the Knesset committee, Israel has 46,855 so-called “ghost” apartments that are not regularly in use. The phenomenon is most widespread in Tel Aviv, Haifa and Jerusalem, where there are 4,746, 3,445 and 3,429 such apartments, respectively.

Sources in the finance and interior ministries stated that in certain Israel cities it has become commonplace to purchase vacation apartments or apartments for short-term residence that remain empty most of the year. This phenomenon reduces the effective supply of housing in these cities and harms the urban fabric of the neighborhoods where such apartments are located. The regulations approved by the committee are intended to encourage the rental of these apartments.

Real Estate Appraisers Association in Israel chairman Ohad Danus expressed great doubt whether the new measure could be enforced by local authorities and its effect on lowering housing prices.

“It’s clear that the ghost apartments in questions are not standard apartments, but generally luxury apartments in very expensive areas,” said Danus. He added that the new measure was a populist political move that would not change the housing situation at all for young couples or the middle class.

New upscale housing under construction in north Tel Aviv. Credit: Nir Keidar

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