Israel has 140,500 empty apartments, on which the government plans to shortly impose double arnona (local property tax) rates, although it is not yet clear how this will be enforced. The measure is part of the housing chapter of the Trajtenberg Report, which the cabinet approved earlier this month. However, only 37% of these apartments - 51,800 - are actually available to be occupied.
The government intends to double the arnona on apartments that stand empty for more than six months. In view of the housing shortage, the statistics on empty apartments are hair-raising. The number of empty apartments has risen 44% from 97,400 in 2000 to 140,500 today. The largest jump - 12% - occurred in 2007-08, between the 2006 Second Lebanon War and the global economic crisis.
According to the Central Bureau of Statistics, 37% of the empty apartments are not yet occupied by new tenants, 27% are occupied periodically. Therefore, for 64% of the empty apartments, there is no natural and clear reason why they are empty at a given moment in time. There is, however, a substantive reason for 36% of the empty apartments: 5% are new, but still unoccupied apartments; 8% are apartments undergoing renovations; 8% are empty because their tenants have died or live in institutions; 8% are sealed, abandoned, or in ruins; and 7% are empty for other reasons.
A quarter of the empty apartments are in the Tel Aviv District, where the housing protest began. 20,000 of the district's 36,000 empty apartments are in the city of Tel Aviv-Jaffa, and the rest are in Bnei Brak, Holon, Ramat Gan, and Givatayim.
The Jerusalem District has 12,500 empty apartments, 9% of the national total, including 5,000 in the city. The Jerusalem Municipality was the first municipality to announce that it would double the arnona on empty apartments, and called on their owners to lease them out.
The Haifa District accounts for 18% of Israel's empty apartments, the Central District accounts for 17%, the Southern District for 16%, and the Northern District for 13%.
The Central Bureau of Statistics says that it has no figures on empty apartments owned by foreign residents, because the number is negligible. The Ministry of Finance reports says that foreign residents own 4.8% of Israel's apartments; in other words, foreign residents bought 4,000 of the 86,000 new and second-hand homes sold in 2011, according to Ministry of Housing and Construction figures. While this does not indicate how many of these apartments are empty, it indicates the level of involvement of foreign residents in the housing market.
Enforcing the double arnona on empty apartments is also problematic. Adv. 1.Dr. Henryk Rostowicz, an expert on municipal tax law, "A local authority knows that an apartment is empty only on the basis of water consumption. This is the only figure to which it has access. If someone leaves a tap dripping in an empty apartment, it could cost more than the arnona." He adds, "Local authorities will go crazy trying to enforce this."
Rostowicz said that, for now, the double arnona is only a cabinet decision. "The government does not levy taxes, the people levy taxes. If you want to do something this nationwide, you need Knesset legislation, otherwise, it is the discretion of the local authority with the approval of the Ministry of Interior."
As for Jerusalem, it has not yet received a response from the Ministry of Interior or the Ministry of Finance to its request to change the arnona directive to include the double arnona clause on empty apartments, possibly because the ministries are waiting for the necessary legislation.
Rostowicz cautions, "If the Knesset passes such legislation, I will be the first to petition the High Court of Justice to void it. This is an undemocratic and illegal act. A tax should not be levied to force a person's conduct with regard to his property."
Published by Globes [online], Israel business news - www.globes-online.com - on March 27, 2012
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