Cheaper land, creation of a more sophistical rental housing market, and the building of low-rent student dormitories are the measures that Prime Minister Benjamin Netanyahu and Minister of Housing and Construction Ariel Atias will announce tomorrow in their emergency plan to ease the housing shortage.
The basic idea is that the highest bidder will not win land tenders. Instead mechanisms will be put in place for discounts on the price of land, and the government will forego maximum proceeds from land tenders.
Tomorrow's plan comes on top of measures already in the works to boost the housing supply. The new measures aim to halve the price of land.
A joint Knesset Economic Affairs and Internal Affairs and Environment committee today approved a clause in the national housing commissions bill to set aside land for affordable housing, but then pulled the clause from the bill after the Prime Minister's Office said that this would require legislation, although Netanyahu will also present it tomorrow as part of his own plan.
One of tomorrow's measures aims to halve the cost of land in price to residents tenders. Until now, the value of land in the tenders was the full assessment price, and the full tax on it. Under the new measure, contractors will offer a final price for apartments, and will receive the land at a 50% discount. Since contractors bid on the lowest apartment price in these tenders, the buyer will pocket the discount. The discount will apply nationwide, and not only in the periphery.
Sources believe that this measure will lower apartment prices by NIS 100,000-200,000.
In addition, eligibility criteria for Ministry of Housing benefits will be expanded to include discharged soldiers and young couples, based on criteria set by the Ministry of Justice.
A more sophisticated rental market, of the kind that exists in the US and Europe, will be created by tenders in which contractors bid on the lowest long-term rent, which will apparently be set at ten years. Under this rent control method, the tenant will know the rent in advance, without worrying that the landlord will raise the rent or evict him. Rent will be linked to the Consumer Price Index (CPI), up to a cap of 2% a year.
Under the plan for student dorms, contractors will be given land cheaply or gratis for the construction of small apartments. The contractor offering the lowest rent will win the tender. The idea is to encourage the construction of hundreds of housing units on public land around the country. Since the government will not receive money for the land, the contractor will make a reasonable return on investment, and competition on prices will presumably not result.
Published by Globes [online], Israel business news - www.globes-online.com - on July 25, 2011
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