Property Law in Israel: Buying or Renting After Making Aliyah
Making Aliyah and settling down in Israel often involves choosing whether to buy or rent property. The Israeli real estate market is unique, and it’s important to understand the legal aspects, rights, and obligations involved in property transactions. Whether you’re planning to rent an apartment or purchase a home, this guide will provide a detailed overview of the property laws and the processes to follow after making Aliyah.
1. Renting Property in Israel
Many new Olim begin their life in Israel by renting a property. Renting offers flexibility and allows you to explore different cities or neighborhoods before committing to buying a home. Here’s what you need to know about the legal aspects of renting in Israel:
A. Types of Rental Contracts
Rental agreements in Israel are usually for one year, with an option to extend. Some contracts allow for shorter terms (6 months), while others can be extended for multiple years. The standard rental contract covers:
Monthly Rent: The agreed-upon rent amount and due date are specified in the contract. It's important to clarify how rent payments will be made, whether through bank transfer, standing order, or checks.
Security Deposit: Landlords typically request a security deposit of 2-3 months’ rent to cover any damages or unpaid rent. The deposit is returned at the end of the lease, provided there is no damage to the property.
B. Tenant Rights and Responsibilities
Israeli law provides tenants with several protections. Understanding your rights and obligations is essential to ensure a smooth rental experience:
Maintenance and Repairs: The landlord is responsible for maintaining the property and handling major repairs (plumbing, electrical, etc.). However, tenants are usually responsible for small repairs or damages caused by their own use.
Early Termination: Breaking a rental contract before the end of the term can result in penalties, such as forfeiting the deposit. However, many contracts include a provision that allows tenants to find a replacement tenant, which can mitigate the penalties.
Arnona (Municipal Tax): Tenants are typically responsible for paying Arnona, a local tax based on the size of the property and its location. It’s important to clarify this responsibility in your rental agreement.
C. Legal Tips for Renting
Read the Lease Carefully: Ensure the rental contract covers all terms, including rent amount, duration, maintenance responsibilities, and conditions for renewal.
Register Your Lease: It’s a good idea to have your lease registered with the local municipality, particularly if you’re staying long-term. This ensures that your rights as a tenant are protected.
Get Written Agreements: Always request written agreements for any amendments or promises made by the landlord, such as repairs or improvements.
2. Buying Property in Israel
Purchasing property in Israel can be an exciting investment, but it requires a thorough understanding of the legal process and real estate regulations. Here’s what you need to know about buying property as a new Oleh.
A. Understanding Israel’s Property Laws
Israel’s real estate market is governed by specific laws that regulate property ownership, buying, and selling. About 93% of land in Israel is owned by the Israel Lands Authority (ILA), meaning that you do not buy land outright, but rather lease it for 49 or 99 years. The remaining 7% is privately owned, and transactions for these properties follow traditional freehold purchasing processes.
B. Key Steps to Buying Property
Hire a Real Estate Lawyer: Israeli law requires that all property purchases involve legal representation. Your real estate lawyer will draft contracts, handle negotiations, and ensure that the property’s ownership is clear (through a Tabu check).
Sign a Purchase Agreement (Zichron Devarim): The first step in purchasing property is signing a preliminary agreement, known as a Zichron Devarim. This document outlines the basic terms of the sale, including the purchase price, payment schedule, and key conditions. While not a full contract, it serves as a binding commitment to move forward with the sale.
Conduct a Title Check (Tabu): Before finalizing the purchase, your lawyer will perform a Tabu check to verify that the seller is the legal owner of the property and that there are no liens or debts associated with the property. This is essential to prevent any legal disputes after the sale.
Signing the Final Contract (Heskem Mecher): The final step is signing the Heskem Mecher (sales contract), which includes all terms of the purchase. Once both parties sign, the buyer must pay a deposit, typically around 10% of the property’s value. The remaining balance is paid according to the agreed-upon schedule.
Property Registration: After the sale is complete, the property must be registered with the Tabu (Land Registry Office) or the Israel Lands Authority (for leased land). This legally records the transfer of ownership.
C. Mortgage and Financing for Olim
New Olim are eligible for government-backed Oleh mortgages, which offer favorable terms, such as lower interest rates and reduced down payments. To qualify, you must meet the following criteria:
You must be a new Oleh who has made Aliyah within the last 10 years.
You will need to provide proof of income and assets, as well as documentation showing your eligibility for the mortgage.
Olim mortgages are available through most major Israeli banks, and it’s important to compare offers to find the best deal.
D. Property Taxes and Additional Costs
When buying property in Israel, there are several taxes and fees to consider:
Mas Rechisha (Purchase Tax): Buyers must pay a purchase tax based on the value of the property. For new Olim, this tax is often reduced or waived for a first-time home purchase, up to a certain property value.
Lawyer Fees: Legal fees for purchasing property typically range between 0.5% and 1.5% of the purchase price.
Appraisal and Survey Fees: If you’re taking out a mortgage, you may be required to have the property appraised. Additionally, many buyers choose to have a structural survey conducted to ensure the property is in good condition.
Real Estate Agent Fees: If you use a real estate agent, you’ll need to budget for their fees, which are typically 2% of the property price.
3. Common Legal Pitfalls When Buying or Renting Property
The real estate process in Israel can be complex, and new Olim should be aware of potential pitfalls:
A. Misunderstanding Land Ownership As mentioned, a significant portion of Israeli land is leased through the Israel Lands Authority rather than being privately owned. Buyers must understand the terms of these leases and ensure they are comfortable with the legal obligations tied to leased land. The lease is usually renewable, but it’s essential to clarify the terms with your lawyer.
B. Lack of a Thorough Title Check Failing to conduct a Tabu check can result in legal complications, such as purchasing a property with hidden debts or ownership disputes. Your real estate lawyer will ensure the property has a clean title, but it’s vital to understand the importance of this step.
C. Delays in Registration Property registration can sometimes be delayed, particularly if the property is new construction or has unresolved legal issues. Working with an experienced real estate lawyer can help prevent these delays and ensure the property is registered in your name as quickly as possible.
4. Property Ownership for Foreigners and New Olim
Foreign nationals, including new Olim, can legally own property in Israel, but certain restrictions apply. For land owned by the Israel Lands Authority, you must be a citizen or permanent resident to lease the land. As a new Oleh, you gain immediate citizenship, allowing you to purchase property.
It’s important to work with professionals who understand the nuances of property law for foreigners, particularly if you are not yet a full citizen or are planning to invest in real estate as a non-resident.
Contact Easy Aliyah: Ready to rent or buy property in Israel? Easy Aliyah offers expert guidance throughout the entire real estate process, from finding your dream home to handling all the legal paperwork. Whether you're looking to rent a short-term apartment or purchase your first home, Easy Aliyah will ensure that your real estate experience is smooth and hassle-free. Reach out today to get started!