Finance Committee approves doubling property taxes on ‘ghost apartments’

Nation’s approximately 47,000 owned but uninhabited residences have drained economy, created cost prohibitive market and stymied supply for young residents.

By
December 9, 2013 20:08
3 minute read.
Finance Minister Yair Lapid.

Lapid looking sharp 370. (photo credit: Marc Israel Sellem/The Jerusalem Post)

The Knesset Finance Committee on Monday approved a sweeping measure submitted by the Interior Minister to double property taxes on the nation’s tens of thousands of “ghost apartments,” or secondary residences that owners utilize for a fraction of the year.

The problematic phenomenon, typically propagated by wealthy Diaspora Jews, has markedly reduced the nation’s housing supply, resulting in under-uninhabited neighborhoods, stalled housing growth and nominal economic growth.

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According to data submitted to the socioeconomic cabinet, there are presently approximately 47,000 apartments in the country not actively in use.

Apartments meet such criteria if they are uninhabited for nine months of the year.

Tel Aviv, Haifa and Jerusalem make up a disproportionate concentration of such units, the data show.

Finance Minister Yair Lapid lauded the tax approval Monday afternoon as instrumental in resolving the present housing crisis.

“Today’s approval is another step that will help increase the supply of housing in Israel,” he said. “I will continue to use all possible avenues to solve the housing shortage and facilitate the Israeli middle class.”



Interior Minister Gideon Sa’ar echoed Lapid’s sentiments, noting the measure will spur growth by forcing some absentee homeowners to rent out their residences, thus generating less costly alternatives for young residents who otherwise cannot afford presently cost-prohibitive rents.

“We must take every possible step to increase the supply of homes on the market for rent or purchase,” said Sa’ar.

“Increasing property taxes on residential apartments that are not used will encourage renting apartments, increase the supply of housing in existing structures and assist in maintaining the urban fabric.”

According to Jerusalem Deputy Mayor Ofer Berkowitz (Jerusalem Awakening) the capital has roughly 10,000 ghost apartments, which has stymied the market and dramatically increased rental costs for young residents.

“Expensive housing impairs the ability of young people to stay in Jerusalem and build their homes and lives here,” said Berkowitz. “We believe that some of these people will rent their apartments because of this decision.”

Berkowitz, who has championed the cause for over three years by actively lobbying the Interior Ministry and Finance Ministry’s to take action, added that the new law will send a strong message to wealthy property owners who rarely inhabit their homes.

“The message is very clear: Owning an apartment and not using it hurts the market, and if they get the message and rent out these units while they’re not here, that will help tremendously,” he said.

Berkowitz emphasized that the law is not meant as a punitive measure, so much as a means to encourage young Jerusalemites to stay in the city and stimulate an otherwise hemorrhaging economy.

“I’m not angry with these people and don’t want to penalize them – I really don’t think they are aware that they are hurting Jerusalem,” he said.

“I just want to send the message that if we increase the number of apartments on the market, we will increase money coming into the city.”

Moreover, Berkowitz said he also intends to submit a measure to the Finance Ministry addressing the roughly 1,500 abandoned commercial buildings in the capital.

“On top of the 10,000 empty apartments in the capital, there are 1,500 abandoned buildings that we’re also trying to get back on the market,” he said. “We are proposing to make another law about this issue so we can improve the economy and add more jobs and culture.”

According to Berkowitz, present commercial property laws stipulate that once a building is declared abandoned, its owners are not required to pay property taxes for three years, and can extend nonpayment for an additional five years.

“All this does is further drain the city’s economy,” he said.

The tax increase on ghost apartments is scheduled to go into effect on January 1.

Lahav Harkov contributed to this report.


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