As of the end of 2018, 170,300 housing units in Israel, 6.5% of the total, were unoccupied, according to figures from the Central Bureau of Statistics. The number of empty housing units rose 4% in the past year, continuing a trend that began several years ago. For example, the number of unoccupied housing units in 2012 was 137,200, so the number increased 24% between 2012 and 2018.
Why are so many housing units in Israel left unoccupied, despite record prices? There are various causes. Some of the housing units are in poor condition and are located in areas with little demand, so it is not worthwhile for their owners to renovate them. Others are in legal proceedings or disputes between heirs.
In other cases, the properties belong to single people who have died, and the property rights have not yet been transferred. There are also luxury housing units owned by foreign residents who use them only on vacations and holidays. Luxury housing units have also been left unoccupied in recent years when the developers were unable to sell them because of the deep crisis in the luxury housing market. The figures show that the increase in the number of unoccupied housing units in the past year resulted from housing units counted as new that are either under construction or have not yet been occupied, and from housing units not yet occupied by a new tenant.
Unsurprisingly, most of the empty housing units are located in the large cities. 18,600 unoccupied housing units, 11% of the nationwide total, are in Tel Aviv; 15,100, 9%, are in Jerusalem; and 12,400, 7%, are in Haifa, while Netanya is in fourth place. The reason is probably the large number of luxury towers built in western Netanya, mainly in the 600 neighborhood designed for foreign residents, who are no longer coming to Israel in the same numbers as before. Other leading cities in unoccupied housing units are Holon (5,600), Beer Sheva (4,400), and Petah Tikvah (4,100).
Since the 2011 social protest movement, the issue of unoccupied housing units has been on the national agenda as a supply of unused housing. This discourse led to the redefining of a regularly unoccupied housing unit. Government regulations from 2013 define a regularly unoccupied housing unit as one in which no one has lived regularly for nine months.
Local authorities used this definition to charge owners of such housing units for double municipal property taxes, and perhaps give the owners an incentive to sell them. As a result of failures by the Ministry of the Interior and the local authorities, this procedure has been discontinued. The State Comptroller commented on the matter in May in a report that examined what the Ministry of Finance, the Ministry of the Interior, and the local authorities had done about the plan to impose double municipal property taxes on regularly unoccupied housing units. The report indicates that only Tel Aviv, Jerusalem, and Haifa took any action in the matter, but received no help from the government ministries. Other municipalities took no action whatsoever, and neither the Ministry of the Interior nor the Ministry of Finance required them to do so.
The State Comptroller's report shows that the idea of imposing extra charges on owners of regularly unoccupied housing units was first presented in a report by the Trajtenberg Committee, which examined the housing market. In March 2012, the government decided to attempt to address the problem by imposing double municipal property taxes on housing units found to be empty, but implementation was negligent. It was found that the administrative order under which the double municipal property tax mechanism operated was not properly defined, which prevented the local authorities from taking action against property owners.
Commenting on the actions of the Ministry of Finance and the Ministry of the Interior, the State Comptroller wrote, "The Ministry of Finance and the Ministry of the Interior did not consider how the administrative order would be implemented and the effect of its implementation, as they said that they would do." The State Comptroller recommended that the Ministry of Finance and the Ministry of the Interior should draw conclusions and take lessons about the implementation of the administrative order, and that they should examine the difficulties and barriers in putting it into operations and its results.
Published by Globes, Israel business news - en.globes.co.il - on October 3, 2019
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