Israeli Government Announces NIS 2 Billion Housing Program for Urban Renewal and Construction Industry Reinforcement

The total budget of the program will be NIS 2 billion, and it will include the promotion of urban renewal in the periphery, reinforcement of the construction industry with foreign and Israeli workers and the development of new construction technologies

Last update: 05.02.2024 | 0:24

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“We will return the real estate market to its pre-war levels of activity”: Housing Minister Yitzhak Goldknopf and Finance Minister Bezalel Smotrich yesterday (Sunday) presented the housing plan for 2024 to the government.

Sections of the program:

1 billion shekels for a subsidized housing program in the periphery: Subsidizing development costs for settlements in the periphery by 50-40 thousand shekels per apartment, in order to make the marketing tenders for new residential projects more attractive – and thus attract entrepreneurs. Minister Goldknopf promised that the move would promote the construction of about 10,000 new apartments at a price of NIS 800,000 in a target program intended mainly for the reserve servants. On top of that, dozens of settlements up to 9 km from the border with Lebanon and Syria will be upgraded to the highest subsidy level (NIS 50,000 per apartment), which should stimulate construction in Kiryat Shmona, Shlomi, Hazor and Katzrin.

NIS 462 million to promote urban renewal in the periphery: Providing a grant to localities based on their ability to promote permits for urban renewal, in the way that the Ashkelon model works for strengthening unprotected buildings – the municipality receives money to incentivize contractors to access urban renewal programs through the development and granting of subsidies and grants, so that the cost of the projects will be lower, and thus they will become attractive.

300 million shekels for grants to localities that succeed in issuing building permits: Any locality that issues more than 500 building permits will receive a special grant. The grants will go to the authorities through new framework agreements between the state and the localities. In the meantime, the state will once again promote the implementation of the property tax fund, which is intended to transfer property tax profits from localities with high income from businesses to localities with little income from property tax, in exchange for promoting building permits.

50 million shekels for state guarantees for the financing needs of contractors: The money will go to the banks and contractors’ financing bodies to allow the contractors to get loans for full construction. The guarantee will only be the financing of the pre-sale component of the contractors, which usually requires the pre-sale of apartments or the provision of higher equity. According to the Ministry of Finance, which promoted the action, the guarantee will allow banks to reduce the number of apartments they require contractors to sell in the early sales, and will allow freer access to loans. The guarantee will only be realized when the project becomes insolvent.

NIS 9 million to bring in foreign workers: The government will increase the quota of foreign workers to 65 thousand workers. The quota will come into effect when about 45,000 foreign construction workers are employed in Israel, but will be reduced if more than 20,000 Palestinian workers return to Israel. Another 10,000 potential foreign workers will be able to arrive in the future as part of bringing foreign construction companies to Israel.

50 million shekels for the development of new construction technologies: The money will be transferred to the Ministry of Housing and the Economy for the purpose of promoting advanced factories for rapid construction and training programs for technological development.

NIS 30 million to promote the employment of Israeli workers in the construction industry: Grants for new employees and promotion of training.

The plan also proposes to extend the working hours of the construction sites, postpone payments by entrepreneurs to the Israel Land Authority and grant discounts on tax payments to entrepreneurs in the long-term rental sector.

According to a presentation by the Ministry of Housing, there are currently more than 62,000 new apartments in Israel that have not yet been bought, and in the last quarter of 2023 there was a low in the purchase of apartments, with only 7,280 apartments, a decrease of 76% compared to the corresponding quarter in 2022.