Steinitz promises thousands of cheap housing units

The government’s plan for rental housing will enable the annual construction of thousands of apartments so that renters won’t have to move every other year, Finance Minister Yuval Steinitz said Monday.

Presenting the program at a Treasury conference in Tel Aviv, he said the aim was to create a meaningful supply of housing for long-term rentals, similar to what exists in the United States and Europe.

Israelis would soon have the option of renting for periods of 10 years or more, “if that is what they want,” Steinitz said.

The program, which is based on recommendations made by the Trajtenberg Report last year, has already passed its first reading in the Knesset. It promises to grant tax exemptions to pension and provident funds that invest in long-term rental housing and to assist those with less means by placing under price supervision at least one-quarter of the apartments in these projects.

Steinitz acknowledged there was a growing credit crunch in the realestate market, but he said it would be eased by enabling pension funds and other financial institutions to provide credit.

Bank Hapoalim and Bank Leumi currently account for 70 percent of credit in the real-estate market, or about NIS 200 billion, according to data presented at the conference by a representative of the Treasury’s budgets department.

“There is no reason that institutions that invest around the world will not invest in Israeli rental housing,” Steinitz said. “When institutional bodies start funding rental housing projects, eventually they will also start providing credit for regular construction.”

Construction and Housing Minister Ariel Attias (Shas) said it was difficult to convince financial institutions to invest in housing rentals instead of “more profitable” commercial rentals. But he said the government could influence them by providing tax incentives and by taking measures to reduce the price of land, which he said would increase yields from the current 3%-4% to a range of 6%-7%.

Yoni Tal, deputy CEO of Menora Mivtachim Insurance, agreed with Attias’s assertion that financial institutions have the money to invest in such projects. But he said he and his colleagues remain skeptical about the program despite government assurances.

“There is no lack of institutional funds, but there is a lack of good projects,” Tal said. “If the program is feasible and the yields sufficient – 7 percent after expenses – I believe institutions will be prepared to invest the funds.”