Is the rental market on the way to a crisis? On the one hand, apartment renters complain about sweeping increases in the monthly rent, mainly in the Tel Aviv area, while on the other hand, the official statistics on the rental market indicate rent increases, but much slower than described. However, an important statistic that is published here for the first time supports the protests that have been rising recently among apartment tenants: since the end of last year, the number of eviction lawsuits filed by apartment owners against tenants has been increasing at a rapid rate. Most of the lawsuits are conducted in the courts of the Tel Aviv and Central Districts.
The data that will be presented below is based on two sources: the Different rent guarantee company, which works for apartment owners and, among other things, conducts background checks on tenants, and the “law worm” which is operated by the Tammanon association. The two parties examined the number of lawsuits for rented evictions that are registered on the “net of the law”, the official website of the judicial authority, which drains the cases, petitions and judicial decisions. The two analyzes are not completely identical, due to the use of different methods for processing the data, but the trend in both is completely clear: 2022 is on its way to being one of the years with the highest volumes of eviction claims.
In “The Law Worm” the lawsuits filed in the last 9 years were examined, and important findings emerge from them: the year in which the largest volume of eviction lawsuits was filed so far was 2020, in which 2,827 lawsuits were filed. The peak month in the last 9 years in terms of the volume of claims submitted was June of that year, which is partly explained by the fact that during a significant part of the months March-May, the country was under lockdown and the submission of claims was almost impossible. That’s why some of them were drained by June of that year.
2022 breaks the record of the Corona year
The economic crisis that hit the country and its residents in 2020 was reflected in a sharp increase in tension between landlords and tenants and in the number of lawsuits. Still, the number of lawsuits filed in the first seven months of 2022 is about 4% higher than the number of lawsuits filed that year.
Last year, in which there was a gradual return to normalcy, was a very optimistic year from an economic point of view – at least in its first half. At that time, it seemed that the relations between the apartment owners and the tenants had calmed down relatively, which was reflected in a significant decrease in lawsuits. Perhaps the fact that in 2020 tenants who felt they could not afford the rent, vacated the apartments on their own initiative also contributed to this.
However, in the second half, the rise in apartment prices began to take off; In the last third of that year, there was an increase in the purchase of apartments among investors, due to the lowering of the purchase tax by the then Minister of Finance Israel Katz. At the same time, there was also a jump in the number of lawsuits filed. The last quarter of that year was the most expensive in eviction claims, of all the last quarters of the years reviewed.
2022 continues the claims momentum of the end of 2021, and in the months of January, April and July the highest monthly claims volumes were recorded in the last 9 seconds. A different analysis shows that in each of these months separately there was a jump of tens of percent in the submission of eviction claims compared to the corresponding period last year. In total, the number of claims filed in the first seven months of the year is higher according to the two tests by 15%-33% than the corresponding period last year.
“State coup”: the tenants are unable to pay
An examination of the lawsuits filed this year reveals that 35% of them are being conducted in the magistrates’ courts in the Tel Aviv district; 21% in courts in the Central District, 18% in Haifa and the North, 14% in the Southern District and 12% in the Jerusalem District. The meaning is not surprising: most of the problems between the apartment owners and tenants come from the center and against the background of the high rental prices.
From the data of the court worm it appears that most of the cases that were opened as of mid-January 2021 – are still open. Most orders have been issued, but there are still financial claims for unpaid rent and the like. 77% of the lawsuits filed in 2020 were accepted or partially accepted, 21% of them were deleted, apparently the tenants and landlords reached a settlement outside the courts, and in 2% of the cases the courts rejected the claims. In other words – when a claim is discussed, the chances are that the apartment owner will win it, but until renovation, he may have to wait a long time.
What is happening in the rental market starting from the second half of last year, that the number of claims has been increasing since then? Different explains that from that period the big increases in rent began. The company’s data shows that in the second quarter of 2021, the national average rent was NIS 4,137 and the supply of apartments for rent reached about 47,000. On the other hand, in the second quarter of the year, the national average of the rent was NIS 4,601, and the supply of apartments reached about 43 thousand.
Attorney Yahli Bar-Gil, the legal advisor of the Different company, an expert in civil litigation and charge enforcement: “It can be pointed out that there has been a wave in the last few months of applications from apartment owners to the court for leased eviction and this is due to non-payment of rent. Period. A real coup”.
Elad Shariki, CEO of Different points to the lack of supply as a significant cause of the phenomenon: “In most places in Israel there is no supply and this causes prices to rise. Landlords want to take advantage of the increase and at the end of the lease agreement ask the tenants to raise the rent or leave. The tenants are looking for another apartment, but cannot find it because there are no apartments.
“At the level of the landlord, there is a trend here to try to take advantage of the situation and bring in more money. On the other hand, this can result in a situation where the tenant does not vacate the apartment, and the landlord will have to turn to enforcement because it will take time for the tenant to find an apartment, if at all.”
A procedure that can last even years
Shariki explains that evicting a tenant from an apartment is a complicated and long procedure, the most extreme step in the relationship between tenant and landlord. Most apartment owners would prefer not to go there and use other tools such as guarantees. This could be one of the reasons for the high guarantees that landlords demand from tenants. “The way to evict a tenant is a procedure that consists of a period in which the apartment owner makes up his mind about how to act against the tenant, which can take two to three months,” he describes. “After this period, he turns to a lawyer, after which comes the eviction lawsuit, which takes 90 days and sometimes more. After the verdict, it can take at least another 90 days until enforcement action is taken. As a company, I have not had the opportunity to evict a tenant in less than 7 months. For a person from the settlement It can take a year or more. According to the law, the guarantees should cover rent for only 3 months a year, and it can be seen that in practice the procedure lasts much longer than that.”
The rental market does not operate in a vacuum, and it is also necessary to take into account its dynamics and the new investor population that entered the market especially in 2021, under a low purchase tax. Apartment prices then rose sharply and the new investors realized, apparently, that the monthly returns they would earn would be lower than expected. Therefore, throughout this period, they make great efforts to raise rental prices, sometimes dramatically. The rising number of eviction lawsuits is a reflection of the extreme reality in the rental market, a reality that is often difficult to see in the official data of average rental prices.