{"id":9142,"date":"2013-02-05T11:11:14","date_gmt":"2013-02-05T11:11:14","guid":{"rendered":"https:\/\/kohelet.org.il\/article\/kohelets-perspective-on-housing-reform\/"},"modified":"2026-05-20T07:04:12","modified_gmt":"2026-05-20T07:04:12","slug":"kohelets-perspective-on-housing-reform","status":"publish","type":"article","link":"https:\/\/www.kohelet.org.il\/en\/article\/kohelets-perspective-on-housing-reform\/","title":{"rendered":"Kohelet Position: Housing Reform"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><strong>The Mission<\/strong> <\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Creating a free market for residential and commercial property in Israel.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">The Issue<\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">Israel\u2019s real estate market suffers from a complex and perverse set of tax and regulatory constraints that suppress supply and distort demand. While all property is affected by these distortions, several factors increase the impact of these constraints on residential housing. Perceptions of high residential real estate prices have become a potent political issue. Residential apartment prices rose by over 30% between 2007-2010, during a period when real estate prices collapsed in international markets. Most families cannot afford to buy a home in the Israel&#8217;s central region &#8211; the coastal zone from Ashdod to Haifa where most people live and most jobs are located. Moreover, Israel lacks a commercial rental housing sector.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">Current Law<\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">The Israel Lands Authority, a state agency, controls 93% of Israel\u2019s real estate. Most land for construction must be leased from the Authority, which, for political and bureaucratic reasons, holds most eligible realty in reserve. Even when the Authority leases land, it puts severe constraints on the use to which the land is put. An entirely different set of constraints to construction is imposed by the Planning and Construction Law, which gives multiple local, regional and national players (ministries, planning boards, local authorities, etc.) the ability to delay or veto land development. In contrast to the United States, any construction activity of even the most trivial kind (as one Israeli Supreme Court case put it, every \u201cnail in an external wall\u201d) requires a regulatory permit. Moreover, extensive areas of Israel lack any approved planning, meaning that construction must be preceded by a multi-year or multi-decade bureaucratic process. Much agricultural land lies near high-demand areas, but a set of court rulings in the 1980s severely limits the ability of the Lands Authority to permit the property to be rezoned for residential development. The Bank of Israel uses its regulatory authority to ration credit to the real estate market, helping prevent a US-style housing market meltdown but also adding more constraints to the housing market. A generous tax exemption for capital gains from the sale of residential units artificially boosts demand for expensive units.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">International Comparison<\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">In most developed Western countries, the vast majority of commercial and residential land is privately owned. In the United States, most zoning regulation is local and phrased in general terms: developers may build anything not specifically prohibited.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">By contrast, Israel\u2019s planning and development regime was largely adopted from Britain\u2019s. UK Prime Minister David Cameron has identified the UK planning system\u2019s constraints on real estate development as a primary barrier to the recovery of the UK economy and has called for extensive reform. Of course, nothing in Britain is comparable to Israel\u2019s centralized system of land ownership.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">Possible Solutions<\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">There is no single fix for a problem created by layers upon layers of conflicting regulation. Moreover, critical data required for understanding the problem is not available. Among the objectives that market-oriented reformers agree upon are:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Get land out of the grip of the Lands Authority and into the hands of private owners and developers.<\/li>\n\n\n\n<li>Simplify or bypass planning and building regulations to reduce planning authorities\u2019 ability to arrest or delay projects. This would obviate private developers\u2019 tendency to delay construction while negotiating and renegotiating their building plans.<\/li>\n<\/ul>\n\n\n\n<h4 class=\"wp-block-heading\">Kohelet\u2019s Recommended Solutions<\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">Kohelet is pressing forward with a wide range of initiatives which, cumulatively, have the potential to break up the housing logjam and move Israel significantly toward a privatized real estate sector:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Legislation to require the Israel Lands Administration to determine, within two years, which of the lands under its control are to be reserved for future public use (such as parks, military training grounds, main infrastructure installations, etc.), with an upper limit cap, perhaps 60% of all lands under its control.<\/li>\n\n\n\n<li>Transfer all land not zoned for public use to municipalities.<\/li>\n\n\n\n<li>Make elected municipal councils the chief planning authority within their areas of jurisdiction; eliminate current bureaucratic regulation which require their decisions to be approved <em>ex ante<\/em> by various government ministries, state planning officials, and their own legal and civil engineering advisers. Currently, these advisers answer to state planning authorities, not the the local planning councils who pay their salaries and whom they ostensibly work for.<\/li>\n\n\n\n<li>Transfer all other lands not designated for public use&#8211;a large amount&#8211;to the Housing Ministry for zoning and marketing.<\/li>\n\n\n\n<li>Legislation reducing the planning delays by allowing builders to legally construe excessive regulatory delays as authorization to build.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"The Mission Creating a free market for residential and commercial property in Israel. The Issue Israel\u2019s real estate market suffers from a complex and perverse set of tax and regulatory constraints that suppress supply and distort demand. While all property is affected by these distortions, several factors increase the impact of these constraints on residential [&hellip;]","protected":false},"featured_media":9137,"template":"","article-category":[525],"custom-tags":[46,590,738,43],"ppma_author":[49],"class_list":["post-9142","article","type-article","status-publish","has-post-thumbnail","hentry","article-category-publications","custom-tags-economy-of-israel","custom-tags-housing","custom-tags-israeli-law","custom-tags-regulation"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.6 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Kohelet Position: Housing Reform - kohelet<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.kohelet.org.il\/en\/article\/kohelets-perspective-on-housing-reform\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Kohelet Position: Housing Reform - kohelet\" \/>\n<meta property=\"og:description\" content=\"The Mission Creating a free market for residential and commercial property in Israel. 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