Jerusalem Municipality to double property taxes on city’s 10,000 ‘ghost apartments’

Unprecedented measure intended to lower home prices for capital’s struggling young families.

People walk down Jaffa Street in Jerusalem on a Shabbat afternoon. (photo credit: ONDREJ ŽVÁCEK/WIKIMEDIA COMMONS)
People walk down Jaffa Street in Jerusalem on a Shabbat afternoon.
In an unprecedented move, the Jerusalem Municipality on Wednesday announced that, as of January 1, it will double property taxes on the capital’s 10,000 “ghost apartments,” generally inhabited by wealthy overseas homeowners who spend a fraction of their time in the city.
Mayor Nir Barkat said the directive – which will cost absentee owners NIS 223.56 per square meter, instead of 111.50 – is intended as “an important tool for making thousands of apartments available to young families in Jerusalem.”
According to Jerusalem Deputy Mayor Ofer Berkowitz, who helped spearhead the initiative, the capital’s ghost apartments have markedly reduced the city’s housing supply, resulting in under-uninhabited neighborhoods and stalled housing and economic growth.
“Expensive housing impairs the ability of young people to stay in Jerusalem and build their homes and lives here,” he said last year, following three years of intensive lobbying which resulted in Wednesday’s approval by Finance Minister Moshe Kahlon.
“We believe that some of these people will rent out their apartments because of this decision.”
Berkowitz contended that the new law will send a strong message to wealthy absentee owners.
“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.
Still, Berkowitz has repeatedly emphasized that the tax is not meant as a punitive measure against overseas homeowners, so much as a means to encourage young Jerusalemites to stay in the city and stimulate an otherwise anemic economy.
“I’m not angry with these people and don’t want to penalize them – I really don’t think that they are aware that they are hurting Jerusalem,” he has 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.”
Meanwhile, the ongoing feud between Barkat and Kahlon over a rejected request in funding for the municipality’s 2016 budget, continued on Wednesday morning during a radio interview in which the mayor said he “cannot explain the conduct of Finance Ministry.”