Bill to double property tax on Jerusalem's ‘ghost apartments’ approved

‘Tax constitutes an important step in adding thousands of apartments for young families in Jerusalem,’ says Barkat.

By DANIEL K. EISENBUD
Updated: JANUARY 5, 2016 03:22
‘Beautiful German Colony Rental’ in Jerusalem (photo credit: COURTESY MAAYAN LEVY)
‘Beautiful German Colony Rental’ in Jerusalem
(photo credit: COURTESY MAAYAN LEVY)
Effective immediately, the cash-strapped Jerusalem Municipality will double property taxes on the capital’s 10,000 so-called “ghost apartments,” generally inhabited by wealthy overseas homeowners who spend a fraction of their time in the city.
Formally approved on Monday, the measure – which will charge absentee homeowners NIS 223.56 per square meter, instead of 111.50 – comes amid a fiscal crisis in the capital that Mayor Nir Barkat says requires NIS 450 million to remedy.
The municipality’s budget shortfall resulted in the abrupt termination of 170 city sanitation workers last week, followed by their reinstatement on Sunday, after the Finance Ministry, moved by mounting piles of garbage in the capital’s streets, agreed to give the municipality NIS 17 m. to cover the costs of the employees.
Still, Barkat and Finance Minister Moshe Kahlon remain at odds over the vast majority of funding the mayor says is necessary from the ministry to balance the capital’s budget.
“This increased rate of collection is made possible following last week’s approval by the Ministers of Finance and Interior of the Jerusalem Municipality’s request to double the property tax charge for vacant apartments in the city,” the municipality said in a statement on Monday.
“Doubling the municipal property tax for these vacant apartments is part of the model initiated by Mayor Nir Barkat with a view to encouraging absentee owners to rent out their property, and thus increase the supply of apartments for young people and families.”
Indeed, the municipality said the increased municipal taxes to be collected from vacant apartments will “serve to promote reduced-price housing for young people and families in the city.”
According to the municipality, a team was formed by the city and Jerusalem Development Authority six years ago to gather information regarding vacant apartments in the capital owned by foreign residents.
Barkat subsequently contacted the homeowners in writing, asking them to rent out their apartments for the benefit of the city’s young population, and six management companies were selected to work with the owners with the goal of persuading them to rent out their properties.
“Doubling the municipal property tax for ‘ghost’ apartments constitutes an important step in adding thousands of apartments for young families in Jerusalem,” said Barkat on Monday.
“Young people are the ‘oxygen of the city,’ and we are working all the time to attract young people and young families to Jerusalem. The entry of thousands of vacant apartments into the market will dramatically increase the supply of apartments for rent to young people, and will also lower rental rates in the city.”
Jerusalem Deputy Mayor Ofer Berkowitz, who helped spearhead the initiative, has long lamented that the capital’s ghost apartments have markedly reduced the city’s housing supply, resulting in under-inhabited neighborhoods and stalled housing and economic growth.
“Expensive housing impairs the ability of young people to stay in Jerusalem and build their homes and lives here,” he said last year, following three years of intensive lobbying.
“We believe that some of these people will rent out their apartments because of this decision.”