Gov't approves plan to raise NIS 1b for public housing

Moshe Kahlon  photo: Globes TV

State-owned housing company Amidar will issue a ten-year bond in order to buy some 1,000 housing units. 

The social-economic cabinet today approved a proposal by Minister of Finance Moshe Kahlon to raise NIS 1 billion for buying 1,000 homes for the public housing stock. This follows a decision to allocate 5% of housing units under construction on state land under the "Buyer's Price" program to expansion of the public housing stock in order to reduce the waiting time for families entitled to public housing.

Under the proposal, state-owned housing company Amidar will raise money from investment institutions and the banks through the issue of a bond. Repayment of the loan, which will be financed from the state budget, will be spread over ten years. This is in addition to NIS 1 billion already allocated to buying public housing units in 2017.

About 2,500 entitled persons are currently waiting for public housing. Until the 1970s, the state built public housing throughout Israel, and the number of public housing units reached some 200,000. In the 2000s, the state began to sell these homes to people entitled to public housing, at a substantial discount, and sold about one third of the public housing stock at discounts of up to 90%, depending on the amount of time the tenants had been in occupation.

With the money that the Ministry of Finance received from the sales, the state was supposed to buy new housing units for the public housing stock, but, according to a report by the Knesset Research department, only 7.5% of the receipts of nearly NIS 3 billion were actually invested in this way. In recent years too, the public housing stock has been eroded. For every housing unit bought and added to the stock, 4-5 were sold. Because of this, the public housing stock stands today at about 40,000 units only.

A severe Ministry of Justice report described the situation of public housing in Israel as "dismal, to the point that we cannot describe in detail all the problems".

Yesterday, "Globes" revealed that some Ministry of Finance officials foresee difficulties in implementing the plan, as Amidar chairman Isaac Laks and seven of the eleven directors are leaving the company, and most of the directors who are stepping down are those who did the groundwork for the bond issue and have financial experience. At present there are no replacements for Laks and the outgoing directors, partly because of a disagreement on the matter between Kahlon and Minister of Construction and Housing Yoav Galant.

Kahlon said today, "The government will not abdicate its responsibility towards those entitled to public housing. I would stress that Amidar will remain under state ownership and will not be privatized. This is good news for hundreds of families that have waited for too many years for a roof over their heads from public housing. This move will dramatically shorten the waiting time for an apartment and will shorten the queue. This decision is part of the just fight to narrow social gaps in Israel."

Published by Globes [online], Israel business news - www.globes-online.com - on July 17, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

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Moshe Kahlon  photo: Globes TV
Moshe Kahlon photo: Globes TV
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