Fighting for Home

Housing, Health, Education, Food, Work, Environment.

July 2011

Position Paper on the Housing Shortage and Planning Committees Law by the Dror Israel Movement
Introduction: A housing and real estate crisis is developing in Israel. This fact is felt all throughout Israeli society and is expressed through the following data. An Israeli needs 132 monthly salaries in order to purchase a standard apartment (in comparison to 60 for the average American). According to the Israeli Statistics Authority ( " ) Israeli housing prices have risen by 41% over the last 3 years. Rental rates have also increased, although at a slightly lower rate. In the face of inflation there is not a single household in Israel that does not feel this burden. This distress is not a natural disaster and can be resolved. For that a clear and persistent policy is needed in the fields of urban planning and national budgeting (e.g. subsidies). Yet the government in Israel is choosing steps that may increase the problems in each of those areas. The Planning Committees Law ( " ) is a perfect example: a partial privatization in the field of urban planning is created instead of dealing with the actual barriers of housing construction. This step will make it easier for the wealthy and contractors to thrive and harder for the public. Reasons for the housing crisis: 1. Land hoarding by contractors. Different contractors were given publicly owned land by the Israel Land Administration (ILA1 ) but they are not developing it. Through this a maximization of profit is made: the value of the land rises, and as a result of the market having less supply the value of apartments already held by the same companies rises as well. For example: Elad Israel has land on which to build 1,000 housing units in Tel Aviv, but is not moving forward with building them. Shikun Uvinui holds land to build some 5,000 units, out of which 2,000 are delayed to maximize profits. Yet the government and the Land Administration are not fulfilling their right - and their public duty - to enforce the leasing contracts on those companies and obligate them to build or give the land back. 2. Development policy. Today there are about 160,000 housing units that are planned and approved According to the ILA, . these have not been built for a variety of reasons (one of which is mentioned above). However, there is another reason that points out cooperation between the government and contractors in favor of the latter: a large portion of planning is stuck due to lack of infrastructure (e.g. transportation, sewage, electricity, water, etc). The State of Israel does not allocate proper budgets

In Israel today there is only a small percentage of land that is privately owned. The rest of the land is owned by the Jewish National Fund and/or the Israel Land Administration and these lands are traditionally leased with long-term leases to citizens.

for infrastructure development causing construction to stagnate and prices to rise. Again the contractors gain and the public suffers. 3. Anti-social housing policy. A reservoir of affordable housing, fitting for youngsters, students, young families or lower income individuals is an achievable goal through acting in various ways. For example, the ILA s planning institutions can order the building of smaller apartments that fit these populations needs. Another obligation can be the building of rental-only housing projects. Also a law on public housing has existed since 1998 that states all income from public housing is to be used in order to increase the number of public housing units. However the government s policy is the opposite: most of the apartments built in Israel in recent years are large apartments, which generate more income for the contractor (as well as the municipalities that can charge a higher tax). Rental-only housing is virtually non-existent. As for public housing, only the first part of the law has been enforced - public housing apartments were sold, however new projects financed by their sale are rare to be found. 4. The State of Tel Aviv . Israel is heavily centered, financially and culturally, on the Dan area (Tel Aviv metropolitan). This phenomenon is known as the State of Tel Aviv . This fact has generated high demand in the center of the country, where the centers of employment, culture and economy are situated, and as a result neglected the diminishing periphery. A surplus of demand around Tel Aviv has also caused prices to rise nationally. 5. Real-estates investments. Research done by the Bank of Israel shows that the main reason for the price raise in the last 2 years is a wide spread phenomenon of real-estate investment purchasing. The interest policy of the Bank of Israel, combined with regressive taxation regulations, has led to a rise in demand and in prices.

Is the National Housing Committees2 Law a Supertanker ? Prime Minister Netanyahu relates to the National Housing Committees law as a supertanker - i.e. a law that has the ability to put out the fire that exists today on the real-estate market. However it seems like this supertanker, brought before the Knesset for approval on July 25th, does not aim to deal with any part of the existing crisis. It does not refer to land hoarding, mention affordable housing and there are no plans for the periphery or public housing. What is it all about then? National Housing Committees are suggested to be established in order to approve building projects quickly. However, as shown above, approval is not the root of the issue as 160,000 units are approved, but are not being built. More so, the law allows a contractor to start building up to 3 years from the start of the lease on the land, which is a continuation of the existing problem. Hasty planning is a gateway for environmentally, socially and economically damaging projects. The existing procedure, although demanding improvement, contains unavoidable elements. A hasty approval may end up in generations of regret.
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The National Housing Committees law will allow the quick transfer of more land into the hands of private contractors who will most likely use it in a way that will maximize their profits at the expense of the wider public.

What can be done? The National Housing Committees law can still be changed in order to assist solving the housing crisis. A reservoir of affordable housing must be developed. A meaningful improvement, allowing for young people and couples to purchase an apartment, can be achieved by making it mandatory for real-estate projects to include at least 20% small and/or rental-only apartments and affordable housing for low income tenants. This will also contribute to a more heterogeneous mix in different neighborhoods, making the phenomenon of slums vs. luxurious housing to decrease. Also, housing costs can be reduced by creating incentives. For example, allocating a billion NIS for infrastructure development in areas where new projects are approved, but have been delayed (see point 2 above). Another way is to reduce the cost of land where public-interest projects are vital (e.g. rental-only building projects). All of these changes are still possible in the framework of the National Housing Committees law. Beyond that, a fundamental change is needed in the government s policy, including the re-starting of public housing projects and establishing housing as a constitutional right.

Where will the money come from? First of all, it is important to note that in 2010 Israel had a surplus of tax-income (in relation to planned spending in the country s budget) of over 12 billion NIS. More so, the government was under budget by almost 3 billion NIS. That money and another 30 billion NIS that was planned to be spent in 2010 was transferred to a savings account. In total, the Israel government saved approximately 47 billion NIS in 2010. Money, therefore, is not the issue a fraction of this sum can be spent in favor of developing infrastructure for the building of the abovementioned housing units that have been delayed for far too long. Also, the building of these units is meant to provide an income that can be reinvested by the government (i.e. contractors and land-purchasers have to pay taxes). A source can be found for finances for future development in relying on a small percentage of the state s income from these units. I imagine what we refer to as elementary needs as the things that today one must fight for and beg salary for and scream out for. This includes five things: food, home, clothes, the ability to give his children education and the ability to get medical treatment when he is ill. (Ze ev Jabotinsky) More information: Uri Metuki 054-6734484; Yaniv Carmel 054-6734405; Dover@Drorisrael.org.il

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