Housing plan for 2022-2025: to build half a million housing units and raise tax on investors

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by Ifi Reporter Category:Real Estate Oct 31, 2021

Four months after the formation of the government and against the background of the astronomical jump in housing prices, Housing Minister Zeev Elkin, Interior Minister Ayelet Shaked, and Finance Minister Avigdor Lieberman announced today Sunday a comprehensive housing plan for 2022 to 2025 centered on the following ambitious goals: planning to build half a million housing units, 280 thousand construction starts, 180 thousand transactions on state lands and a record marketing already this year of 80 thousand housing units. At the center of the program are several new measures, which have not been tried before, and their main purpose is to increase the supply of apartments in Israel.
The tax on investors (second apartment or more) will rise back to 8%; A sweeping ban on excessive use (clinics, law firms, etc.) in residential apartments in the center of the country will be imposed; A sweeping ban on the designation of apartments for short-term rent in the center of the country (Airbnb) will be imposed; It will be possible to split detached houses easily and a significant tax benefit will be given to the splitters.
 In addition, a tax benefit will be given to private landowners in the center of the country if they build quickly, a plan for urban renewal will also be promoted in the periphery and two more district committees will be established. These are the main steps in the new housing program presented at noon (Sunday) at a press conference attended by Finance Minister Avigdor Lieberman, Housing Minister Zeev Elkin and Interior Minister Ayelet Shaked. These measures are in addition to other actions already announced by the government.
The government ministers hope that the tax increase on real estate investors to 8% of the second apartment will pass in the Knesset as early as next week, with a view to reaching implementation within 10 days. The law memorandum will be published today. Today, the implementation of other measures, such as a ban on excessive use of offices in residential buildings, will take years. There will be no clinics and dental clinics and law firms. There is no reason to do this when there are a lot of buildings that are meant for offices. We are going for a 'ban on overuse'. It will take a few years for it to work because in fact we will no longer extend the unusual use. They will come to the municipality to extend the overuse, and will receive a negative answer. "The ban on the use of apartments for Airbnb purposes is also a step that will take several years to implement.
Alongside the heavier tax on investors, the government also offers benefits in the form of a tax benefit for construction on private land with a view to speeding up construction. When selling land, a praise tax is imposed that embodies the difference between the purchase price and the sale price. 50% is paid on the profit until the year 2000, and 25% is paid on the profit from the year 2000. Under the reform, the tax will be 25% if construction on the land is within four years.

These are the main points of the housing plan:

* Purchase tax increase - 8% for a second apartment, if the amount of the apartment is over NIS 1.6 million
* Airbnb ban - will be defined as excessive use and will be banned in the center of the country
* Prohibition of Excessive Use - Permits will not be renewed for clinics and law firms
* Investment in housing support infrastructure - about NIS 13 billion per investment
* Target price - in the center and also in the periphery, limited to 20% of the price of the apartment or NIS 300,000
* Additional foreign workers - another 30,000 workers to expedite construction in Israel
* Urban renewal - lowering the consent percentage to 65% and measures that will make it easier for local authorities to approve such projects
* Long-term lease - increase in apartment auctions for rent, change in the tax benefit for rental housing
* Public housing - an increase of 4,700 apartments, renovation of 1,200 and evacuation of intruders
* Planning Committees - Establishment of two additional committees, and extension of the OTMAL.
* Conversion of offices to offices - up to 30% without redesign, for entire buildings through a committee
* Encouraging construction on private land - a reduced praise tax for those who build within four years
* Shortening planning and licensing procedures - self-licensing, licensing institutes, providing maximum relief at the beginning to avoid the "salami method" and requests for relief later
* Apartment splits - tax benefit for landlords who will build a housing unit
* Urban renewal in the periphery - a plan that will make the investment in renewal economic in the periphery as well
Lieberman opened the press conference by presenting the big picture. He emphasized that this was a global phenomenon, tried to lower expectations among the public and made it clear that he did not know what the outcome of the move would be: "The prophecy was not given to me and I do not predict housing prices. Central is the Prime 0, which is the engine for all mortgages and all the massive purchases. "
He promised: "We will reach 80,000 marketing by the end of 2021. This is the big record since 2016. Thank you very much Linki Quint (CEO of the Israel Land Authority), I lost a bottle of whiskey for it, I did not believe we would reach it. We also break all records in transactions. "He noted that rising prices in Israel are part of a global trend. Housing Minister Zeev Elkin noted that mayors have stopped building and marketing land because the state has not invested in housing-supporting infrastructure:" We have decided to invest NIS 8 billion in multi-year infrastructure. Of Remi's Ministry of Transportation and Royalties, NIS 5.5 billion in classrooms. And NIS 5.4 billion in subsidies for development and purchase grants in the periphery. It's the port work of all the players on the field, to go mayor after mayor. The stability in the housing market. "
Elkin elaborated on a "target price" program, which would provide "an immediate solution for young couples who want to buy an apartment, and without waiting long, they are not to blame for the recent increase, they are not to blame for not having a budget." According to him, apartments in the program will be marketed at a discount of 20% and up to NIS 300,000. The price is fixed according to 2020, and it will not absorb the increase of 2021. This is up to 65% of all state marketing in the center and periphery, it is a very large quantity. "We need to understand the meaning of the decision - the state stops speculating on land and loses a lot of money, at least NIS 12 billion, and according to less conservative estimates it is NIS 20 billion."
In long-term leases, Elkin said an all-time record of 6,100 housing units was achieved in the current year. "In 2022, at least 6,500 apartments will be marketed.

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