PM presents diverse program to tackle housing crisis

Program would include discount on land for construction, new homes for long-term rental at reduced rates and 10,000 new dormitory units for students.

By NADAV SHEMER
July 26, 2011 16:30
4 minute read.
Netanyahu. Steinitz, Attias unveil housing reform

Housing press conference 311. (photo credit: Marc Israel Sellem)

 
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Prime Minister Binyamin Netanyahu and senior cabinet members on Tuesday unveiled a wide-ranging program to tackle the housing crisis, promising to improve the situation of young people, students, demobilized soldiers and the homeless.

The linchpin of the “affordable housing plan,” the removal of barriers to planning and to the sale of land for housing, will be completed by the end of next week, Netanyahu said.

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He also promised a discount on the price of land for construction, new apartments for long-term rental at reduced cost, and 10,000 new dormitory units for students.

Netanyahu released the plan at a press conference at his Jerusalem office, flanked by Finance Minister Yuval Steinitz, Construction Housing Minister Ariel Attias, Deputy Minister for the Advancement of Young People, Students and Women Gila Gamliel, and Prime Minister’s Office director-general Eyal Gabai.

The prime minister said the program had been more than two years in the making, and that he recognized prices were too high even before the recent trend, which has seen the cost of housing rise by 40 percent since 2007.

Calling the nationwide tentcity protests “justified,” Netanyahu said he understood the urgency of taking measures to alleviate pressure on the housing market.



“The housing crisis in Israel is real, it’s not something that somebody fabricated,” he said.

“Young people who earn money cannot afford to buy an apartment. They are forced to live with their parents and very soon will be forced to live with their grandparents. There is a severe shortage of apartments, and I identified this problem back when I was finance minister [in 2003-05]. We have a small country and we are making it even smaller because there is a state monopoly called the Israel Land Authority that releases land little-by-little.”

Reform of the ILA and the national building and planning committees will be completed next week, Netanyahu said, adding that it would provide for the large-scale marketing of land and the rapid and efficient planning of housing units throughout the country.

Commenting that “the main way to lower the prices of apartments in the long term...

is to build a lot more apartments,” the prime minister said he expects reforms approved on Monday regarding planning committees to result in 50,000 new housing units being put on the market within a year and a half.

Presenting the various aspects of the program, Netanyahu said the state would put in place a 50% discount in the price of land for the construction of apartments, in what he and his ministers called “price for tenant” tenders. Tenders will be awarded to contractors who offer the lowest price for apartment purchase, with preference given to allocating apartments for young couples, recently discharged soldiers and national service graduates.

The state will also initiate the construction of apartments for long-term rental at reduced cost, with a 25-100% discount on land for contractors offering the lowest price to renters. Similar to the discount on land for purchase, this will force contractors to offer lower prices, Netanyahu said, ensuring that “the entire benefit of the decrease will be reaped by the renter.”

Student housing was also placed high on the agenda, with land to be given to contractors free of charge in order to initiate the construction of 10,000 new dormitory units, and half-price public transportation smartcards to be issued on a one-year trial basis to encourage students to move away from city centers.

Finance Minister Yuval Steinitz, speaking after Netanyahu, said this would result in 20,000 students moving from rental apartments to dormitories, which would “have extra positive consequences,” by “vacating thousands of housing units” in city centers, and therefore boosting overall supply.

Finally, to fill some of the more than 140,000 apartments and offices around the country that are devoid of occupants, the government will expand municipality taxation powers. Rate exemptions for owners of empty apartments will be limited to six months, after which mayors will be permitted to raise rates at their discretion.

Summarizing the program, Netanyahu said that the correct approach for a government is to combine the twin pursuits of a free market and social justice. “The reason the prices are so high is because there isn’t a free market,” he said. “The state has a monopoly on land, and blocks the sale of land.”

The prime minister said his government had initiated three “revolutions”: First, by “changing the way we treat land that the government holds, [as] our aim is not to maximize profit on land, but rather the opposite, to cut the price of land”; second, by correcting a market failure and introducing housing for low-cost rent; and finally, by utilizing unused land inside cities “for the good of the public.”

Bank of Israel Gov. Stanley Fischer said in a press release later in the day that he supported the government’s program, and that if implemented it will help achieve the longterm goal of increasing housing supply.

Fischer said there has been an 11% increase in housing starts in the past year, and that with time this will lead to an increase in supply and a subsequent moderation in the price of housing.

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