Although the coalition agreement signed by the Kulanu party and Likud grants Minister of Finance-designate Moshe Kahlon broad authority in real estate matters and lays the groundwork for far-reaching changes, it is also expected to lead to an early dispute concerning the criteria for those eligible for low-cost housing.
Under the coalition agreement, Kahlon plans a significant change in the marketing of land and housing tenders. Land tenders will be marketed according to the "buyer fixed price" method: "Up to 80% of the apartments will be sold to young couples buying their first apartment or to single people over 35, according to criteria to be set. The remaining apartments will be marketed to those seeking better housing and having only one apartment, who will be required to sell their previous apartment," the agreement states. This means that the state tenders will be designed solely for these groups, while investors will be eligible to purchase only apartments built on private land, or in the secondhand market. The agreement also states that those eligible for low-cost housing in state tenders will not be able to sell it for five years from the purchase date, and if they sell it before then, they will be charged betterment tax.
Although the agreement does not specifically address the character of the "buyer fixed price" tenders, or the criteria to be set, a corresponding coalition agreement signed by United Torah Judaism and Likud puts restrictions on the future criteria. "The government shall act to eliminate discrimination in housing criteria, and shall revert to the criteria that prevailed in 2012 in these matters," this agreement states. This means that the means testing criterion introduced into the buyer fixed price criteria will be eliminated, and the relevant criteria will be those practiced when Ariel Atias was Minister of Construction and Housing, which benefited the haredi (ultra-Orthodox) sector.
Sources inform "Globes" that while Kulanu did not specify the character of the criteria it is planning for the buyer fixed price program, or the implementation of the tenders themselves, it is already known that the party opposes removal of the means testing criterion from the equation. This fact is likely to lead the two new coalition partners into a head-to-head collision.
The coalition agreement states that responsible for the planning administration will be shifted from the Ministry of the Interior to the Minister of Finance, as well as the other planning institutions, including the District Building and Planning Commissions, the national housing committees (which will be extended for another term), and the National Planning and Building Commissions for Priority Sites. Full legislation for these, including the process of taking the land, will be completed after the government is formed. Control of the planning institutions supplements the authority granted to the Minister of Finance to appoint the chairmen of these committees seven days after the government is formed (if a government decision is required). The agreement also states that the measures requiring legislative amendments will be completed within 30 days of the government's formation, and that the Minister of Finance will chair the housing cabinet and be responsible for the Israel Land Authority.
The agreement also specifies measures for increasing the supply, removal of barriers, and taxation of investors. Among other things, these include a tax on construction delays (recommended by the Trajtenberg Committee and in discussions by the housing cabinet in the previous government), completion of national planning and building commission for preferred sites legislation involving a new quasi-confiscation procedure for promoting residential plans, and giving the Minister of Finance additional authority in land confiscation. At the same time, the government will continue to move forward with the establishment of an urban renewal authority, and will take additional measures in this area.
The coalition agreement also mentions a rental housing company that will continue operating, but with a change in concept: it will also be able to market land designated for sale, not just for rent. At the same time, rental construction on public land will be promoted. The agreement also addresses measures for encouraging urban renewal in the vacate and build framework, and new restrictions will set clear and fixed recompense for those removed, together with restrictions on signing separate contracts among all the apartment owners. The government is also undertaking to continue promoting the establishment of an urban renewal authority, and addition measures in this area.
The agreement also addresses the question of construction and professional personnel, stating that a mechanism will be established that will enable an Israeli company to reach an agreement with a foreign construction company which will be able to employ foreign workers on any project. Another point addressed is the current standards in the construction sector. A committee will be established to simplify the existing standard in order to reduce performance costs. This committee will submit its recommendations 90 days after it is founded. The agreement also refers to public housing, saying that the government will act to acquire 700 apartments for public housing each year, which will be designated for those entitled and waiting for public housing and those receiving entitled from the Ministry of Absorption. The state has not purchased public housing for many years.
It is important to note that while the coalition agreement specifies a long list of measures, some of which are significant and require legislative changes, whiles others are simpler to implement, this is still a toolbox, not an orderly plan. It cannot be ruled out that some of these will be carried out later, while others will remain on paper, among other things due to expected disputes between the coalition and the opposition, disputes within the coalition, and the ability to carry out measures required a more fundamental change in housing. The substantial difference between Kulanu and United Torah Judaism on criteria is likely to cause the first crisis, but certainly not the last.
Kulanu declined to comment on the issue.
Published by Globes [online], Israel business news - www.globes-online.com - on May 4, 2015
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