Cabinet to Vote on Trajtenberg Housing Bill Sunday

Committee led by Prof. Manuel Trajtenberg was charged with finding ways to reduce Israel's high cost of living, especially for the middle class.

Some of the recommendations proposed by the Trajtenberg committee to ease the country's housing crunch will be up for cabinet approval Sunday, including sanctions against developers that delay construction, higher municipal taxes on unoccupied homes and measures to increase the housing supply in minority communities.

The 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.

Some provisions are expected to receive government approval Sunday.

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 arnona 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.

Israel 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 criteria sets 100% employment as the criteria, in keeping with pressure from Shas.

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