New law to limit rise in rent

When it goes into effect, landlords will not be allowed to raise the rental price by more than two percent a year for three years.

November 20, 2014 17:32
1 minute read.
Israeli apartment

A renovated Israeli apartment. (photo credit: URIEL MESSA)

Justice Minister Tzipi Livni and Finance Minister Yair Lapid presented a new policy on apartment rental Thursday that would limit rises in rent, provide tenants more security, define certain landlord responsibilities and codify new legal requirements for what can count as an apartment.

From the time the law goes into effect on January 1, 2015 until 2020, landlords will not be allowed to raise the rental price by more than two percent a year for three years. The landlord will also be required to show the new tenant the previous tenant’s contract, so they can see the difference in price.

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Furthermore, it will limit the amount a landlord can demand in “arvut bankait,” or bank guarantees. Unlike the US, where paying one month’s rent as a security deposit is standard in apartment rentals, landlords often demand exorbitant amounts in bank guarantees, in which the bank freezes funds in the tenants account and holds them, usually for a fee, in the event that rent is not paid.

The law will also set definitions for what counts as a habitable apartment, including a minimum size of 26 square meters, running hot and cold water, sewage, a kitchen and a bathroom.

It will lay out precisely what the landlord is responsible for fixing or repairing, and give tenants legal recourse if the landlord fails to follow through. A municipality-sponsored survey conducted in March found that 65% of renters said their landlords were unresponsive and 32% had invested their own resources into fixing or improving part of the apartment under the landlord’s responsibility.

The current system, said Livni, made renting life unstable and forced people to move regularly. The March survey found that 92% of renters have one-year leases, while 51% said they moved at least three times in the past 5 years.

The rental market in Israel is significant, particularly in the big cities. Some 80% of young people in Tel Aviv are renters, said Ron Huldai, the city’s mayor. From 1997 to 2012, the percentage of 30-39-year-olds renting their apartments throughout the country rose from 25% to 37%.

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