Merhav insists that the contractors waged a legitimate struggle, “I appeared in the Knesset, I passed professional materials, we conducted a media campaign, all within the framework of the law in the most professional manner.” On the other hand, he claims that Elkin and his men are the ones who threatened the contractors. “We received very serious messages from him. He said, ‘If you act against the law, I will see it as a personal declaration of war on me and I have an orderly plan to take care of you.’ We have records of things. “We are astonished, we did not believe that a minister in the Israeli government would dare to speak out in a threatening manner. And we see this as our attempt at intimidation and silence.”
It was alleged that you exerted improper pressure on Elkin, and that you may have even violated the Antitrust Law
“All of Aviad Friedman’s claims are in the context of his and his minister’s election campaign and their plight. No one believes these claims, it’s nonsense. The fact that we ran a legitimate democratic campaign within a legislative process: ‘To our colleagues, even though we disagree, the discussions with you were professional and matters. I have a lot of respect for working together, I have a lot of appreciation for your organization that acted responsibly and professionally.’ Why, when we sat in the Knesset’s Finance Committee, no one said, ‘Gentlemen, you are breaking the law, not the Finance Committee spokesman, not the Housing Ministry spokesman, not the Ministry of Justice, not Friedman himself.’
If you or the president of the association say that the move will lead to an increase in prices, is this not an attempt to coordinate prices?
“In my opinion, they are trying to put pressure on law enforcement, trying to be threatening. We are super strict people, we have no influence and no intention to direct the market. As part of a discussion on a legislative process, we were invited to express our opinion. Former Deputy Attorney General Erez Kaminitz He wrote in an opinion column on the amendment to the law that it is an unfortunate timing that will lead to a rise in prices. “And there is a minister here who is running a mad run to lead a move that is all about pouring oil on a boiling fire. The market is super competitive. We can not determine for the contractors what to do and how to do it.”
As stated, the amendment to the law allows 40% of the price of the apartment to be linked to the construction input index, because this is the part of the price that embodies the construction costs. For the state position other components such as land price and entrepreneurial profit are not affected by the construction input index. According to the contractors, the problem is with the law, that it does not allow them to link 60% of the price of the apartment to any index, and because the purchase is in payments over 3 years, the value of the money is eroded.
Merhav explains “We did not invent the linkage, everything in the State of Israel is linked, especially in a payment transaction. You buy a toaster that is linked, you buy a leasing car that is linked, you take a loan that is linked, all long-term financing is linked. The contractor also finances the purchase of the land Pays linkages and interest rates.This instrument is legitimate to preserve the value of money.We told Elkin you are violating the fundamental right of contractors, the right to freedom of contract and the right to preserve the value of their money, our claim was supported by economics professors, law professors, lawyers, all “Support the claim that there is a legal problem here. The Ministry of Justice has also repeated its statement time and time again that without linkages at all, this is a constitutional problem. So what is everyone wrong with?”
Why do you need to attach components that are not affected by rising construction costs?
“The Ministry of Justice said if you want to change and say that the linkage to construction inputs is incorrect, then you will set another index. We said you will set the index with them. This is our main claim against the law, this is a violation of the basic rights of contractors.”
The input index went up at sharp rates that no one predicted two years ago, you rake in a lot of money from it, is that not enough?
“The linkage to the index is not related to the contractors’ profits. The Ministry of Housing itself shows that over the years the entrepreneurial profit has not changed. It remains the same. And consumers, who will shed blood for each other.This is the issue.The linkage to the index only preserves the value of money.So we also proposed a mechanism that will allow to link to the construction input index or cost of living, whichever is lower.We are not looking to take advantage of a particular index. “Why didn’t he wake up a year ago? Why didn’t his predecessors take care of it ?! Because it was clear to everyone that this was the right legal and contractual situation.”
Maybe you haven’t dealt with it to this day because you put pressure on you?
“There has never been such an initiative, so there has been no pressure from us. Because it is clear to everyone that the method of buying on paper for another 3 years, is a method that justifies linkage to maintain the value of money. We told Elkin, look it should not be passed on to apartment buyers. Solutions: They will take out a mortgage now and pay the full price of the apartment on the day of purchase, thus solving the linkage problem, but then they will have to pay a mortgage for 3 years during the construction period and buyers do not want to do that.
“Another solution is a package deal that we proposed in which the state would freeze land prices, we would freeze the price of apartments and everything would be in a signed agreement. If the price of land does not rise you solved the problem. And it’s one simple step. This is because in 2021 alone the state took 80 billion shekels in real estate taxation. There is no deficit in the state budget today just because of this matter. ”
You care about contractors, but what about the public that has suffered price increases in recent years and more indexation?
“Contractors’ profits remain at the same rate all the time because construction inputs have gone up, it also shows from the data of the Ministry of Housing itself. Concrete has gone up by 100%, iron has gone up by 80%, workers have gone up. You can not find a foreman. There is no doubt In the end, the public in the State of Israel pays the prices. If the thesis that the Ministry of Housing pumps is correct that the contractors are pigs, the contractors should sit quietly. So why for 3 years we offer a plan to cool the market ?! “Sees that the profits are not greater. The uncertainty is great. There is no land, the local authorities do not release permits, the contractors are not blown away by this uncertainty, on the contrary it is stressful and difficult. There are so many contractors who are in a difficult situation.”
Elkin presents the amendment to the law as an achievement that does not fall short of the reform he led in the communications market during the period when Moshe Kahlon served as finance minister, Merhav, on the other hand, claims that Elkin’s tenure in the Ministry of Housing only caused damage.
“Anyone who looks at the last year in the housing market, in the year that Elkin served, sees that this is perhaps the most miserable period in the housing market. This year, housing prices jumped by 16% to 20%. 16% is the entire market – first and second hand, prices The new apartments jumped by 20%, this was not in any tenure of his predecessors, with Kahlon the annual rate was 3.1%, with Galant 3.3%, with Shasha Bitton 3.2%, with Litzman it was at an annual rate of 8.6%, but Elkin doubled per year.
“In the face of this failure, it is clear that the person is in serious distress and instead of taking responsibility for his failures, he is trying to pass it on to the contractors and throw the responsibility at them.”
Elkin inherited problems, is a housing minister for a year, and got the ministry after a two-year stalemate because of the transitional government.
“The housing crisis is an ongoing crisis and there is no doubt that governments for generations have failed. In Elkin’s era it ran the craziest way. Even he admitted he lost control of this market. What did he choose to do? Lotteries, chose to be Las Vegas.
“The claim that the contractors are pigs is the opposite, if there is anyone who benefits the most from the rise in housing prices, it is the State of Israel. It plays in a casino. In Las Vegas, the winner is the casino and in this case the casino is the state.
“More than 50% of the public consider the government responsible and not the contractors. Elkin reads the polls realizes he was wrong and tries to escape responsibility and impose it on us. It’s not a bubble that someone is pumping prices, people need apartments, there is a real shortage of apartments.”
The government may be wrong, but you are the ones who raise prices and profit from it
“Everyone agrees that the rise in prices is due to the price of land that Rami markets, there is a graph prepared by the Ministry of Housing and shows that over the years the factor that has most affected the rise in housing prices is the price of land that rose 11 times more than apartments.”
The contractors are the ones who submit bids in tenders of the Israel Land Authority, they are the ones who raise the price
“The contractor reacts to the market and does not produce the market. The failure here is an ongoing government failure. The state monopoly masters land and markets it in insufficient volume. The market needs land to build 80-70 thousand lands a year, RMI spends less than 50 thousand, and so it causes For shortage in the market. And this is leading to a rise in prices. “If the state had listened to us and is now throwing 300,000 housing units into the market, prices would have gone down. All economists say that. No one is attacking the axiom that the problem is the lack of sufficient supply.”
Precisely in Elkin’s time, there was an increase in the beginnings of construction and the volume of marketing by Rami
“This year there is a very large amount of construction starts, all the result of processes that started before Elkin. The start of construction is the result of a building permit that takes an average of 30 months.”
Do you have a line for tenant price winners who are currently in uncertainty because following the amendment to the law contractors have announced that they are stopping signing buyers?
A complicated legal situation has arisen here. A statement from the Ministry of Justice on Tuesday states that a legal opinion is required by the ombudsman of Rami and the Ministry of Housing and accompanied and directed by the Ministry of Justice. According to which the price of apartments is fully linked to the input index, and on the other hand now the state forbids pinning, it is clear to all the jurists that a complicated situation has arisen here.
“When you run a deep run to amend the law and establish facts and do not invest thought in all the nuances and then a bad law is created that leaves a lot of holes and legal problems that will throw the parties into legal proceedings. No, they wanted to create working space on the eve of the election, they wanted legislation that created a lot of problems and spilled oil on the fire. “
What about the thousands of eligible people who have been waiting for an apartment for years?
“All of these price-per-tenant and target-price projects turned out to be extremely problematic to implement because of the failures of the Ministry of Housing and barriers to infrastructure and regulation that delay projects for years. The Ministry of Housing wanted to prove to the public that it does it good.” Chances are there is no sewer, no access road, no interchange and infrastructure. Work on people’s eyes leave them with a broken trough. Then they say the contractors are to blame. The public does not buy it. The public understands that the difficulty is the government. The Knesset also said they understand A more dramatic action. “
Some contractors dragged their feet because they were comfortable when the price was linked to the input input index that soared
“The association does not deal with individual cases. We are talking about the macro of the market. If there are individual cases of someone who breaks a contract and his performance is not good they will take care of him. Probably not do them because it is clear to everyone that this is not the problem.”
Why do contractors refuse the request of homebuyers to advance payments, in a way that will allow them to reduce price increases following the rise in the construction input index?
“I do not intend to call on contractors to take any action. We do not take care of it, we do not call on contractors what and how to do. But yes in the Knesset we said that in our opinion should allow payments early. Financial linkage. Then everyone told us you were right, they called the Supervisor of Banks and he also said that there is no such device. Because the contractors come with clean hands and say here we call advance payments but create a financial instrument that will allow the value of the money to be maintained and sits in the escort account. Once they give the device the contractors will do it themselves. Once there is a financial instrument that does that. “