Plan to double arnona on empty apartments draws ire

Cabinet's decision to double property tax on empty apartments sparks mixed reactions from real-estate brokers.

By NADAV SHEMER
March 22, 2012 23:04
2 minute read.
Apartment building [illustrative]

Apartment building 311. (photo credit: Ronen Zvulun / Reuters)

 
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Israeli real-estate brokers with foreign clientele have reacted with mixed emotions to the cabinet’s decision to double property tax on empty apartments, with many worried about a negative reaction from home owners.

The government this week approved a proposal to double the arnona ceiling for apartments that stand empty for more than half a year, as part of its passage of the Trajtenberg Report’s housing chapter. Other measures include instructing the Israel Land Administration to market 187,000 new apartments over the next five years and increasing maximum rental assistance for individuals eligible for public housing.

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The government’s measure could potentially aggravate foreign property owners, Stay at my Place founder Simon Berkley, whose firm organizes short- and medium-term Israeli rentals for mainly English-speaking visitors, told The Jerusalem Post Thursday.

“They would ask: ‘Why are you targeting us, when we’re Zionists who bring money to your country, come here three times a year and put money into your economy?’” he said. “‘We’ve bought an apartment here; we already pay taxes, gas and electricity bills and everything else we must spend for the upkeep of out flat.’” Berkley acknowledged the measure would achieve its intended aim of increasing housing supply to local residents. But he said the government should find a less-confrontational way to encourage home owners to lease their empty apartments.

“I actually see a lot more people willing to rent their places out now than they were before, because their businesses aren’t doing as well,” Berkley said of his mostly British clientele.

“I guess if they knew how much they could earn by renting them out anyway, they would choose to do so without being forced.”

The government estimates about 140,000 apartments and offices throughout the country are devoid of occupants and hopes its arnona decision will put 15,000 empty units back on the market each year.

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The Post surveyed several Tel Aviv real-estate agencies that cater exclusively to the French market. All of them said empty apartments in Tel Aviv are a thing of the past because most French owners now either inhabit their properties full-time or rent them out on a short- or medium-term basis.

However, the problem still exists in locations such as Ashdod, according to one agent. He said there are about 300 empty French-owned apartments near the marina, and since tourists prefer to stay in central Israel, there is practically no demand for short-term rentals in the South.

Another agent said doubling arnona would be good for the Israeli market, but it could dampen foreign enthusiasm for the Israeli property market. It might also encourage owners to sign fake leases with relatives or close friends to avoid double taxation, he said.

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