Netanyahu promised thousands of rental homes - result: 90

In July 2011, Prime Minister Benjamin Netanyahu said, "We will build thousands of rent-controlled apartments." In practice, only 90 rent-controlled apartments have been marketed, and none have been built.

In the two years since Prime Minister Benjamin Netanyahu announced the real estate reforms, only 90 rent-controlled apartments have been marketed, and none of the apartments has been built, according to an investigation by "Globes". Belying expectations by the Ministry of Finance and Israel Land Administration, investment institutions did not participate in seven of the eight tenders.

At a press conference in July 2011, Netanyahu said, "We will build thousands of rent-controlled apartments." The promise was backed by a decision by the Israel Land Administration Council to build 5,000 rental housing units as part of affordable housing plans.

The Israel Land Administration has published eight tenders to date for rental housing, under two programs in which only some of the apartments were slated for rent control. An analysis of the tender in a series of article by "Globes" (2-9 September 2012) found that the tenders' structure benefited contractors, and offered very little help to eligible renters. The reasons were a guaranteed discount on the price of the land, a cap on the number the number of rent-controlled apartments to 25-40% of the housing units in a project, and the fact that the developer was allowed to sell all the apartments in a project after 10 or 20 years.

Of the tenders for rental housing, four tenders, for the construction of 638 apartments, failed: 24 apartments in Rishon LeZion; 164 apartments in Modi'in; 114 apartments in Beit Shemesh; and 318 apartments in Beersheva.

The Israel Land Administration succeeded in marketing only four tenders for rental housing, for a total of 425 apartments: 238 apartments in Ra'anana; 50 apartments in Jerusalem; 24 apartments in Kfar Saba; and 113 apartments in Ashdod.

The marketing tracks for the projects are mixed. Some projects have both rental apartments and apartments for sale at market prices. Of the projects which the Israel Land Administration has succeeded in marketing, there are only 90 rent-controlled apartments.

The estimated cost of the land discounts in the projects which were successfully marketed, compared with regular land tenders in the same areas, is NIS 200 million. In other words, the cost of finding a solution for rent-controlled apartments is NIS 2.2 million per apartment.

Published by Globes [online], Israel business news - - on May 13, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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