A letter attached to the most recent municipal tax bill received by Tel Aviv residents informed those renting out apartments for the short-term, such as through Airbnb, that they will be paying almost 2.5 times the regular rate. Instead of NIS 52.20 per square meter per year, apartment owners renting out their homes through Airbnb will be paying NIS 124.01 per square meter per year.
The change does not take place with immediate effect. Although the city council has approved the change, the ministers of interior and finance also need to approve the measure. This is likely to happen before August 18 for the rest of 2019 and by the end of the year for the 2020 municipal taxes.
The Tel Aviv - Jaffa Municipality claims that the current tax rate of NIS 52.20 per year is one of the lowest for Israel's biggest cities. Following the sharp rise in the number of apartments rented out commercially and the subsequent harm to the quality of life of residents, and the effect it has on the rental market, the figure of NIS 124.01 per square meter was set, approved and now awaits approval from the ministers.
There is speculation that the municipality may introduce further measures such as restricting to 90 days per year the amount of time an apartment can be leased to vacationers. Paris, for example, already has such a restriction of 120 days, while Barcelona restricts the number of licenses given for vacation apartments. Barcelona's residents are up in arms about 'over tourism' and the protest movement it has spurned concerned not only by overcrowding in public spaces but also the tourists bustling up and down their apartment staircase. There is a long list of other prominent European cities, including Amsterdam, Berlin and Vienna, have asked the EU to take action over Airbnb.
According to the Tel Aviv Municipality, while the city has 10,500 hotel rooms, 17,000 rooms are available for short term rental. 81% of them are complete apartments rented out at an average price of $186 per night. Most of these apartments are in central Tel Aviv.
The municipality has calculated that this works out to one apartment rented out to tourists for every 25.4 residents. This compares with a ratio of one apartment for every 113.4 residents in Rome and every 45.1 residents in Amsterdam.
In Tel Aviv, the municipality has found that 70% of the properties on short-term rentals are concentrated in the hands of a very small number of owners. For example, the municipality found that the 3,087 apartments advertised on Airbnb had just 191 owners. The municipality said that, "After the ministers approve the new clause, these properties would be located by the municipality by the means at our disposal and they will be charged accordingly."
The Airbnb phenomenon has also taken thousands of apartments off the market, which would otherwise be available for regular rentals, pushing up prices and making options scarcer for young people looking to rent in Tel Aviv.
Published by Globes, Israel business news - en.globes.co.il - on July 11, 2019
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