The panic of foreign owners of Israeli property

In ordinary days, pre-coronavirus, as you walked through the bustling cafés, you were, in fact, walking past real ghost apartments.

An aerial shot of a Tel Aviv beach (photo credit: BARAK BRINKER/TEL AVIV-YAFO MUNICIPALITY)
An aerial shot of a Tel Aviv beach
(photo credit: BARAK BRINKER/TEL AVIV-YAFO MUNICIPALITY)
Years ago, one of my friends, a wordsmith and wag, started translating innocuous names of streets in Jerusalem, only to discover a completely new meaning in English. A very good example was the Valley of the Ghosts, which is the main street that runs through the trendy German Colony, otherwise known as Emek Refaim – this was the very place where King David was defeated in a major battle with the Palestinians of the time – the Philistines – and the name derives from the Bible. 
In ordinary days, pre-coronavirus, as you walked through the bustling cafés lining this attractive thoroughfare, a great favorite with tourists from all over the world, you were, in fact, walking past real ghost apartments and these aroused the ire of the Jerusalem Municipality. The city pointed out that there were thousands of apartments totally unoccupied throughout the city.
The writers of this column actually do not agree with the city’s position in this regard and the owners of these apartments contribute in significant ways to the economy of Jerusalem, but this is a subject for another column.
But now, in the days of the novel coronavirus, the 150,000 apartments owned by foreigners throughout Israel are undergoing a different major crisis. Approximately one third of these apartments are not rented out at all and a sizable part of those that are offerred for rent are leased through the Airbnb system, which are short-term leases. The short-term rentals are drying up quickly as the country goes into lockdown. Air flights are stopped, and the masses of tourists that usually fill the streets of Jerusalem have disappeared. 
But even those apartments that are leased, or the tens of thousands that are empty by choice, present a huge problem for the absentee landlords living abroad and who are having their own economic problems in a lockdown either in the United States or in Europe.
It is well known that around 5% of Israeli properties are owned by foreigners and absentee landlords. This is an investment of billions. Even in ordinary times, the foreign owners do not handle these substantial assets in a business-like manner. 
Often these purchases are emotionally charged where the people want to have a slice of Israel or some may view the apartment as some sort of insurance and a place to go to as a refuge. There are forty thousand empty apartments in Israel and the building committees often complain that there is nobody to whom to turn in case of emergency. Burst water pipes, theft, or just people squatting in the apartment, are recurrent problems and neighbors and building committees have complained that they have nowhere to turn to reach a person responsible in times of emergency and often do not even have an address for the owner.

TO MAINTAIN the value of these properties, care and attention must be taken if they are not to lose their value. Problems arise with a tenant not paying the bills, tenants disappearing in the dead of night leaving massive utility bills and untold damage behind. The more expensive properties, villas with gardens, are often neglected and the gardens go to rack and ruin. 
And then there is the question of insurance. Most people do not know that empty apartments lose their insurance coverage after the property is empty for two weeks. One can negotiate with the insurance company to obtain proper coverage even for an empty apartment.
A better way would be a system of visits to the empty apartment on a weekly or bi-weekly basis. This is the task of any good property management operation and is good practice undertaken by law firms and others who provide these services. They are in constant contact with the apartment tenants and/or building committees and the municipality to ensure that everything – including infrastructure and systems – is in good order.  This kind of constant contact also sends a message to everyone that this property is properly managed and that there is someone responsible to whom people can turn in case of problems. Good property management assures being in touch with every property every week to ten days and problems are dealt with as they arise.

In these days of the coronavirus crisis, new concepts have to be put into place. With caution and prudence, the management operations can continue to take care of and to maintain foreign-owned property in Israel. Due to the pandemic today there are basic services that are not functioning in the physical sense, like banks, municipal offices and so on; everything has moved online to interact and coordinate with all of these entities so that managers can check payments and be in touch with building committees and city authorities, among others. 
In properties that are intended to be rented, property management departments can now install cameras in order to show the properties online. Because of the closure (obviously within the new regulations), innovative property managers have installed keyless entry systems, which allows a person to enter and view the property utilizing a number.
Particularly in these days, where distance is the order of the day, good management practices cost very little, make excellent sense and help maintain Israeli property stock in good order, so that when the crisis is over, as it most certainly will be, properties have not lost their value. 
The writers are attorneys working in the same law firm. Haim Katz is the senior partner and the firm has branches in Tel Aviv, Jerusalem and the United States. Maayan Harkham is cohead of the law firm's property management department. [email protected]