THE TEL AVIV skyline.
(photo credit: REUTERS)
The housing cabinet on Monday approved two plans to boost housing supply and bring down the cost of apartments, particularly for young couples and first-time buyers.
“Our younger generation has rights, not just obligations,” Finance Minister Moshe Kahlon said. “A roof over your head is a basic right, and it’s our duty to supple one.”
The plans will produce a “massive supply” of apartments aimed at young couples, both in the periphery and high-demand areas, he said.
The first of the plans will broaden a mechanism for doling out subsidized state land to developers who promise the lowest cost for their units. Young couples who are first-time buyers will have first dibs on the apartments, on condition that they do not sell them for five years.
A tenth of the apartments will also be designated for local residents. The land subsidies can go as high as 80 percent of the appraised value of the land, benchmarked from the beginning of June.
In areas where the scheme is expected to have less of an impact, the state will also offer development subsidies of NIS 40,000 to NIS 60,000. The Finance Ministry estimated the grants and subsidies of the whole program would amount to NIS 200,000 on average per apartment unit.
The second plan will allow construction projects that are already in the works to expand by 20% without needing additional approvals. The temporary order, which will apply to buildings that do not yet have a frame built, allows developers to get on-thespot approval to add more units, on condition that half those units are small apartments (under 75 square meters) appropriate for young couples, and none of the units exceeds 150 sq. m.
The plan is intended to make a quick push for new apartments using existing infrastructure, thus sidestepping the lengthy and costly approval process and need to build further infrastructure to accommodate new buildings.
Local authorities will exact a fee from increased building that they can use toward developing public spaces.
Overall, the Finance Ministry expects its initiatives to get 82,000 units into the planning process by the end of 2015, 45,000 of which will be on state land. The Bank of Israel has estimated that the country needs roughly 40,000 to 45,000 construction starts each year to meet the growing demand for housing.
The plans must still be approved by the Knesset before becoming law.