Atias 1, Steinitz 0 / Netanyahu Returns Periphery Grants

Finance Minister Yuval Steinitz and Housing and Construction Minister Ariel Atias agree, government to provide special benefits to first-time homebuyers in 30 communities.

The government is to provide special benefits to first-time homebuyers in 30 communities designated as National Priority Zone A, in a handshake deal concluded yesterday between Finance Minister Yuval Steinitz and Housing and Construction Minister Ariel Atias.

The deal hammered out between the treasury and the Housing and Construction Ministry will give these homebuyers benefits amounting to up to NIS 100,000 per home, in the form of loans that become government grants if the borrowers remain in the priority zone for at least five years, as well as state subsidization of infrastructure projects in the areas where the homes are built. The latter reduces the development costs paid by builders.

Netanyahu, Steinitz, Atias
Tomer Appelbaum

The ultimate goal is to reduce by tens of thousands of shekels the price of apartments in the periphery. While the list of communities has not been finalized, it will presumably include Kiryat Shmona, Tiberias, Carmiel, Acre, Ma'alot, Yeruham, Arad, Ofakim, Sderot, Dimona and Netivot.

Only people who do not own another home and are buying an apartment costing NIS 600,000 or less will be eligible for the benefits. Only high-density residential construction - that means apartments, not single-family homes or townhouses - will be included in the plan.

The agreement will presumably replace the mortgage subsidy plan put forth by Atias as a private member's bill. Officials in his ministry yesterday expressed satisfaction with the agreement, which was facilitated through the personal intervention of both Steinitz and Shas party spiritual leader Rabbi Ovadia Yosef.

Atias met last night with the treasury budgets director, Udi Nissan, in an effort to tie up loose ends.

The government anticipates that the benefits program will add 4,000 new apartments a year to the designated communities, the housing minister said yesterday. The main target audience for the program is young married couples currently living in places such as Be'er Sheva or Haifa and the adjacent bayside suburbs, collectively known as "the krayot." "We don't believe that a young couple from Givatayim would decide to move to the Galilee on account of the grants, though we would obviously welcome that," Atias said.

Interministerial wrangling

The understandings between Steinitz and Atias came after weeks of wrangling between their respective ministries. Atias had threatened to submit his mortgage subsidy bill to a first reading in the Knesset today. The draft law called for the state to issue payments of NIS 800 a month to first-time homebuyers purchasing apartments in National Priority Zone A (effectively, an NIS 140,000 grant ). Steinitz opposed this arrangement, fearing that by increasing demand it would actually end up raising home prices.

With the rabbi's blessing

On Thursday, Prime Minister Benjamin Netanyahu called Steinitz, Atias, Nissan and Eli Yishai, who in addition to being the interior minister and a deputy prime minister is also chairman of Shas, Atias' party, for a meeting. Steinitz and his treasury economists objected to the location grant idea, but Netanyahu - who in 2003 had done away with these benefits - tipped the scales in favor of restoring them.

Steinitz said he would be willing to compromise as long as the package did not create a deficit in the state budget and did not conflict with the government's aspiration to reduce housing prices.

It now remains up to the Finance Ministry to figure out the total cost of the benefits package and to decide where to get the money from. Some of the funding might come out of the budget reserves, from budgetary allocations that have not been used or from new budget cuts.