The ministerial committee for planning and building, headed by Prime Minister Binyamin Netanyahu, has approved reform aimed at speeding up the approval process for new construction.
"The reform will cut down on bureaucracy and simplify procedures to enable entrepreneurs, as well as citizens, to get approvals and exercise construction plans without having to suffer from heavy and unjust bureaucracy," Netanyahu said Thursday. "The full implementation of the planning and building reform will expand the supply of housing and cause prices of apartments to fall, in particular for young couples."
The Interior Ministry is expected to present a time schedule for implementation of the first stage of the reform within the next few weeks.
Annual investment in construction and development amounts to an average of NIS 34.5 billion. However, construction planning and permit procedures are tedious and time consuming and costly, which has led many investors to build outside of the country. As a result, the supply of housing is outstripping demand, while construction costs are rising, causing property prices to reach record levels.
The reform comes against the background of Israel's low ranking in the category of building and construction in the World Bank's Doing Business Index.
The government said shortening the planning and permit process by six months would save the economy NIS 250 million a year. Full implementation of the reform, including improvement of quality of construction, is expected to save the economy NIS 4.5b. a year. The reform is also expected to boost the attractiveness and competitiveness of Israel for foreign investors.
Netanyahu said Israel was one of the leading countries in the use of personal computers, but 120th as far as building permits are concerned.
"As far as this reform is concerned, we are not a Third World country, but a Fifth," he said.
In the first phase of the reform, the procedure for getting housing approvals will be digitalized, so that it can be followed via a Web site at any stage.
The reform will introduce fixed schedules for processing plans, divided into three tracks and run by a "one-stop shop" system centralizing all relevant professional bodies in different fields, which have to provide approvals.
Under the first track, or the exemption track, minor construction and building plans - for example, building a two-meter fence or installing industrial air conditioners and solar panels - will be exempted from the current requirement of a permit and will receive immediate approval.
Under the second track, or the fast track, permits for building plans that require minor engineering work - for example, the closure of balconies, addition of a pergola, or for the addition of construction of up to 25 square meters - will be given approval within 45 days.
Under the third track, or the full track, large construction plans involving intensive engineering work - for example, construction of a new building or bridges - will be given approval within 90 days.