Will Young Couples (and Others Without Their Own Homes) Ever Be Able to Own Their Own Homes in Israel? (Guest Post)

F.N.B - a friend on Facebook had the following to share regarding a new law that has just gone into effect in Israel. The law stipulates an increase in the purchase tax for real estate investors to 8%. Here's what F.N.B had to say:

Real estate purchase taxes for investors were supposed to go up to 8-10% on July 1st - but then suddenly two days ago the treasury dept changed the effective date to today causing havoc in the real estate market.

This whole tax increase thing is such BS because many of the apartments the treasury is trying to save for young couples are still not affordable to young couples making 10-15,000 ILS a month between two people.

If the goal is to help young people afford an apt then isolate apartments that suit younger people and offer incentives like 0% VAT on new projects and 0% Purchase Tax on first homes up to a reasonable threshold like 2,000,000 Shekel - better yet the government can release land for development at discounted prices and regulate the price a developer can charge on those specific projects.

Real estate is huge business for the government - 18% VAT on every new apartment sold plus 18% VAT on the cost of materials and services to build the buildings and on consulting fees like attorneys, agents, mortgages etc - plus Purchase Taxes and who pays the most in Purchase Taxes? INVESTORS - I highly doubt they think this will solve the housing crisis as much as they're hoping to gain higher tax revenues from investors.

At the end of the day - this change hurts everyone - especially young couples who can't afford to buy an apt on a 10,000-15,000 ILS a month household income - it's not enough to pay for life and save money for a 30% down payment plus expenses - and now that they still can't buy apartments, investors will pay more for these apartments and charge higher rents or not buy at all causing a rental crisis.

The winner in this game is the tax collector because once the dust settles, investors will buy and the taxes will be paid and rents will go up and nothing will change for the young people desperately trying to make ends meet.

The full article regarding the new tax can be read here: Treasury seeks instant investment property tax hike.

Welcoming Olim: Indeed, the housing crisis has become impossible to deal with for those earning minimum wage amounts, coming to Israel with no money at all, and for those just trying to get any start of life in Israel

Taxes areon the rise. Service providers (for real estate) are on the rise. Those selling are asking for more and are being able to invest further, however those who cannot make the start are left stranded. When will changes be made to assist those who have committed themselves to living in Israel and trying to make a start with limited funds? Are we encouraging others to come to Israel for the sake of convenience (everyone is doing it - you'll be okay - come on!) or are we serious enough to assist those in need of proper absorption? Where will help come from if not from those who have the ability to make real positive changes?

Renting in Israel: What to Consider (Realistically!)

For those choosing the option of renting in Israel, there's really a lot that needs to be considered. Of course, purchasing an apartment in Israel has its own numerous considerations - a topic for another post. The ideas in this post can assist in giving a few ideas for both - with an emphasis on those wanting to get a start in Israel, but who lack the funds to purchase their own apartment.

Lets make it clear from the start. This post is for those who are "strapped for cash" but (probably like everyone else) need to live in a contraption that has four walls and a roof. Lets also make it clear - from the start - certainly when it comes to lower rental units, the apartment one is looking for, is usually a lot smaller than what one may be used to from other countries. Not only the apartment itself, but even the way it looks and the condition it is in. It's usually safe to say that the cheaper the rental - the more likely the apartment would have been less cared for!

There are no general rules about what the landlord is required to do to make the lessee happy. In fact, it will ultimately be up to the lessee to do his/her own homework in making sure things are in the best of conditions that he/she can cope with. That's not the discussion for this post.

What is the discussion relates to who you are. It's a fact that may be overlooked when you arrive. Advice about renting from social networks and those who do not know you as a real live person who has a life of their own, will include points such as taking the cheapest place - if that's all you can afford. Advice may also include living in an area which is also cheaper (even if you really feel uncomfortable about it!) It sounds right - after all. If you cannot afford to live in Jerusalem (probably the most expensive area to live in, sharing this title with Tel Aviv,) you may need to move elsewhere!

Ideas may be suggested such as Tzfat, Beer Sheva - the Northern and Southern areas of Israel. If these areas do not appeal to you, you'll be lead into the next general choice - the Gush - a section of Israel known as Yehuda and Shomron (Judea and Samaria,) that by world standards is subject to dispute regarding Jewish ownership. As a result of world politics, not everyone wants to live there. On the other hand - those with strong Zionistic tendencies often choose to live in these areas specifically.

One of the highlights in living in these areas is the opportunity to hear the Muezzin which produces an awesome sound at least five times every day. Though not found in the towns themselves, they come from the very close Arab villages. Do see Judea and Samaria Area (especially bottom of page under municipalities) for more information regarding the cities found in the Israeli West Bank Settlements.) Indeed you will find rentals cheaper in all these places, and you should not feel you are lacking anything by being in any of these places. It is all Israel.

With all this - and really the focus of this post - a word of caution. Don't forget to be realistic to yourself. You see... you probably know yourself better than anyone else in the first instance. In the second instance, you may have a certain type of lifestyle that requires you to live in a particular place for whatever reason it is. Following the crowd - because you lack the financial ability to rent centrally may not always work. When it doesn't, you may even find yourself considering returning to your country of birth (or anther place on the map - somewhere!) To explain:

Let us assume you rent in the center of Jerusalem because your work is there. After much research, you'll probably find that if you need to seriously increase your income, you won't necessarily find it easy in Tzefat. That is just how it is! Jerusalem - being central - is expensive. But don't forget, now that your work is there, as a result, your transport will be a lot cheaper than having to live in an outside area in the Gush - which may be very cheap, but lack adequate transport to get you to work on time - let alone the additional cost of travel! In addition, the constant and lengthier travel will take its effect on your health (especially if this is important to you,) and will actually add to your financial expenses. It's something one only ever gets to understand after doing this type of routine oneself!

Let's take another example: Again, your health may be important to you. You may need to be close to a hospital - or at least be able to get to the hospital in a hurry (for whatever reason.) Living in certain areas of the Gush will not afford you the luxury of a bus when you need to travel. In addition since you are already strapped for cash - you probably won't have your own car! The only way you'll get to the hospital is via ambulance - an expense of some 1000 shekels. You'll need to pay that money upfront - before being treated - don't forget! Being in Jerusalem and closer to easier transport means you could take a taxi (many times) to get to a hospital, instead of paying the ambulance. Again - only those who know the urgency of such matters, value and appreciate the importance of having easy access to transport facilities when it counts most!

Here's another example: You may live in an area in the Gush which has one or two stores for food and general things. The price of the food may far exceed what you pay if you lived in a more expensive area which has its own supermarket which actually charges far less for basic food (and other!) items. As a result, you may as well consider living in the more expensive area - if in fact it meets your requirements better!

Are you still trying to purchase furniture (of any sort) for your home? Living in an outside area will mean paying a lot more for transport to get the things you need to you. It may sound like a once-off purchase! But all of a sudden, it's a heater in winter (often not available in certain cheaper areas), two fans in the summer, a large garbage bin - or maybe even a fridge, stove or cupboard! Not only will it be more expensive in transport - but there are many companies who will not even come out to your area because they do not consider these areas as a part of Israel!!! You'll be forced to using an outside moving company who will charge you double and triple the amounts the store would charge if you were situated in an area which is politically okay!

Are you religious? Do you fulfill the laws of Family Purity and need a Mikvah nearby? Don't forget, you may find yourself living in a cheaper area - at the expense of being far from the Mikvah. Is it important to you to live close to a synagogue? Are you prepared to compromise on a cheaper apartment (wherever it is,) and lose out on being able to pray with a Minyan on a regular basis etc. 

Have you considered the advantage of living near a post office? What of living close to your Kupat Cholim? Though it's not the hospital - if you're not well, it can be imperative that you live close by. Are their specialist doctors who frequent your Kupah? If you need a specialist on a regular basis - and find yourself renting where it's cheaper but much further from the specialist - have you outweighed the realistic costs of time and expense when it comes to visiting the doctor?!

There will always be people to criticize the concepts in this brief post. It's not for them. The post is here to show you how so many factors need to be taken into account before making a choice of where you will live. Relying on those who prefer to "shake you off them" with an approach of always going where it's cheaper, will not always bring you to your goal - a long term one of settling in the country.

While the actual cost of rent is vital - don't forget to add in the costs of your life! Don't forget your general transportation costs as well as the costs of food and items at nearby stores (places you will frequent.) Will you really save by living in the "cheaper" area after all? Do you know what type of lifestyle you will have by living in the cheaper area? Are you going to live there just because it's cheaper - or because you really want to live there?!

Did you know - for example - that many people travel to the Rami Levy superstore in Beitar Illit, from all areas of the Gush and even other outside areas too - just to do their shopping there because the prices are so much cheaper?! But consider this: If you are Torah observant, and money is tight - that by living inside this area, you would have immediate access to the store - and save on a daily basis!

Did you know - for example - that many people travel to the Kupot Cholim in Beitar Illit, from all areas of the Gush just to make a visit to a doctor or dentist - because they lack various medical specialists in their own areas?!

It may look like it's cheaper when moving to an area that seems cheaper - but don't forget to be realistic to yourself, because you know yourself best! Don't forget to ask yourself - are you actually saving money when you take your entire lifestyle into account?! Will the initial lower rent actually save you money, time - and even your health - when it comes to all your activity in Israel?!

For assistance in understanding the importance of these concepts in a more comprehensive manner and to make a detailed accounting of an area you are interested in - as opposed to another area, contact us directly and we would be happy to assist you to do a chart of comparison to assist in giving you a better idea of some things to consider. Our approach is centered on your lifestyle. It is clearly not a real estate approach to finding your ideal home.

Jobs in Israel - and What You Really Get Paid

The new (and old) Oleh/Olah may well be surprised to find out both the cost of living in Israel as well as what a job actually pays. For those reading this blog regularly - you may have seen this issue addressed before - but there's never enough said on this subject and it's vital to educate yourself in understanding what you'll be doing to earn an income in Israel - and what you will be paid for your efforts. 

There's a well known fallacy that you get paid what you're worth and that if you're not getting paid enough, it means you need to get a better education. Let's set things straight... The general Israeli outlook is one of socialism. It encourages working for a boss and being a part of a working team that arrives at work at 7:30am and leaves at 6:30pm every day - 6 days a week. In real terms what this means is that the "boss" receives the majority of the income generated by the business - and most employees receive an "average income" which in real terms is known as "minimum wage".

It may seem like everyone is doing okay - but minimum wage really means you'll be earning less than ₪25 an hour. Again - in real terms, you'll be generating some ₪4500 per month before taxes, Bituach Leumi (national insurance) and other other basic deductions that happen before you actually access any of your income. To qualify these figures and the situation at hand - if you'll be working in the main central Jerusalem area - you'll most likely need to be living there. Roughly speaking a 2.5 room apartment - that means one bedroom and one and half other rooms (i.e. the main Salon and a corner) will set you back some 1.1 million Shekels. Do the mathematics on your monthly salary and you will quickly realise it will take you almost 15 years of constant saving to earn the minimum deposit required to purchase that home. I neglect to mention being unable to eat, stay anywhere, use transport or communication methods of any kind during that time - as you continue to save your money. If on the other hand you're considering rental, a one room apartment may well set you back some ₪3700 per month - or in real terms your entire salary after your basic taxes (if you are lucky!)

Yes, this is the real cost of rental and housing. I was happy to hear of another outstanding radio program recently - podcast linked below (you'll be directed to the site it is on.) It is here to educate and to make you aware of just what the job market is actually doing to the average person in Israel.

Remember, you can often earn a lot more working on your own - even if you incur the wrath of friends who cannot understand why you are not "working" - as above that all people should be part of a socialistic society. Yet, ironically as an educated person, working a full time job will often see you earning less than an uneducated person with no experience. 

Choosing your type of work in Israel means choosing to be honest about what you need to do to earn a livable income - as opposed to fitting in with the crowd. Many coming to Israel will either give up highly specialised fields to opt for house cleaning, bus driving and guard work outside of shopping centers - all jobs which often earn at least the same, if not more than the jobs going for highly educated people with many years of experience. It's a phenomenon that makes absolutely no sense. But the faster one gets to understand the process here, the easier one's integration can be.

In this radio podcast - Why are the Wages in Israel Alarmingly Low - you'll get to hear more about what is actually going on, giving you the ability to reconsider the type of work you'll be wanting to do when living in Israel.  

Radio Interview: The Costs of Renting in Israel - From the View of a Minister of the Knesset

If you're not yet living in Israel and thinking of making Aliyah - you'll need an introduction into the housing market. To clarify one thing, this blog is about sharing things as they are. We don't hide anything - and want to make it clear, we're here to help and assist. Mostly this blog is real because we understand what being a real person is all about - when it comes to making as large a move as coming to live in the Land of Israel.

As for housing, everyone knows you can either buy or rent - but few acknowledge the real costs involved. Having watched a variety of forums said to assist one in making Aliyah I've personally seen a two-sided approach. There are those who are a part of the "haves" who have little mercy when it comes to acknowledging the needs of those others who are a part of the "have nots." Though this is not the place for discussing the actual costs of purchasing a home, a brief look at some of the main sites on the Internet sharing prices throughout all Israel points to the need of being exceptionally wealthy to be able to own one's home in Israel. For those from the USA they have the advantage (even with the lower dollar!) that their money goes up. Those from such locations as South Africa (and there really are those type of people living here!) receive far less for their any money they have earned overseas. In perspective, an American coming to Israel with $100 000 will at least have some ₪350 000 to use in purchasing a home. A South African coming with R100 000 will have all of ₪30 000 to his name. On a basic home of one million shekels it is clear, the American will have an advantage. He will never understand the South African. Let alone one who arrives with literally nothing and who is tied in to a minimum wage job paying just over ₪4000 per month!

Back to our survey... What's fascinating regarding the responses of the "haves" is their very often angry feelings towards those of the "have nots", as they feel that having usually comes about through starvation, deprivation and a variety of other "important good attributes" to master. I was personally told by a young lady of about 22 recently married, who explained that she and her husband were able to make the down-payment on their home by purchasing food that was on special only. She maintained this behaviour for all of about the two to three months of her engagement and was able to pay some 350 000 Shekel (at least as I had calculated it) towards her new home. She suggested we do the same. 

Recently I heard of another young family man who had managed to save his down-payment up by simply eating bread for breakfast, lunch and supper and treating himself to eggs once a week! I'm not sure how long he went on like this for, and he didn't share how much he was actually making nor his job, but on that minimum wage job - even without eating, renting, using communications, transport, medication, clothing and other necessities, one could save the necessary deposit if one maintained this for about 10 years at the very least (for a very small room/apartment,) let alone he did it by just eating bread!

In vain I had tried finding some sort of comfort from someone who would speak the truth about how one can ever raise the sort of money needed for a down-payment without either having worked seriously hard beforehand and earned it (perhaps overseas) or by being given a gift (something which I felt well applied to the first young lady in the story above!)

For the rest of us - we are subjected to the rental market. It's a jungle out there. But don't believe me. I haven't actually done the liquid-only diet for three months to say honestly that I'm not able to come up with the huge deposit money. I heard this interview just last night and was most grateful to hear a Minister of the Knesset (MK) speaking about HIS own battle in owning his own apartment and the terrible jungle out there in terms of rentals. It's a world where landlords may raise rents to their hearts' content. They may throw one out onto the street (literally) when payment does not come through (forget the law so many will tell you about!) Rental homes can be anything from a hole to a place with three walls. Mold may be common and never attended to. Electricity fittings, windows and other home necessities may never be fixed - even before one moves in. But the renter has no choice - because if he cannot afford his own home and he needs a roof over his head, he must take whatever comes his way. Many never understand this. Many never see it - especially when they are overseas, and especially when they are already taken care of.

There needs to be some sort of law for rentals. Something that gives honour and respect to the renter as much as allows the landlord his opportunity of renting his home. There needs to be some sort of standardization. With some 2 million out of some 7 million people renting in Israel, the issue is an urgent one. The renting situation is draining the lower-earning individual from every shekel he owns - all at the expense of his health and his ability to ever save for buying his future home. Yes, it's a jungle!

Don't believe me. Take a listen to this powerful interview and get another realistic look at things. I hardly believe Minister Hilik Bar has ever considered the liquid/bread diet only, but I'm sure if it was realistic, he might let listeners know more about it. If nothing else, at least he could also own his own apartment!

Just click here to be taken to TLV1 radio and listen to "I'm an MK, I'm a tenant and I want the law to protect tenants rights."

Mortgage in Israel

The following post is an excerpt of an article written for us by Avraham Mahler for our next issue of "Yibaneh Yerushalayim."

Purchasing a home in Israel can be a very expensive and complicated process. Naturally, everyone wants to keep buying costs to a minimum. One small mistake in your mortgage process, however, can cost tens of thousands of Shekels over the length of the loan. We at Mortgage Israel use our experience to match each customer with the mortgage that fits best for their specific financial circumstances. It is our primary concern that each customer receives the attention and service necessary to obtain the best terms possible and eliminate the stress involved with acquiring a new property. 

Please contact Avraham for your free consultation at 052 734 6327
or amahler@mortgageisrael.com.

We'd love to feature your advert too. Place an advert with us in our magazine and you stand to be featured in our blog and possibly our newsletter as well. If you have a service related to Jewish weddings in Israel, setting up a new home in Israel, real estate, travel, touring in Israel, please be in touch to advertise in our magazine. 

Word for the Day - CHUTZPAH!

If you're living in Israel or even if not - if you're Jewish (and even if not!) there's one word you really do need to know. It's CHUTZPAH! In Hebrew it's written "חוצפה" but you can write it just as well in English because everyone really does know it already! It seems to have just the right sound to it and if you say it with enough energy and enthusiasm, you're sure to know what it means. You might find the purists who will translate the word as "impudence" or "insolence" - but don't let any of those words fool you. Chutzpah is so much more! It seems to have its own meaning whenever it's said. Is it really worthwhile to look for a translation for this extremely expressive almost onomatopoeic word?!

We'll let you think about it on your own. But meanwhile, we found just the right picture that exemplifies this most unique word. Hopefully it's not your pram. Hopefully they're not your bicycles. They can't be! You're too good to ever let anyone call you "Chutzpadic!" You're too caring to realise the dangers of others navigating through large items to get to their destination safely without tripping over your property! 

For those not yet familiar with the variety of taxes in Israel, you'll come across one called "Vaad Bayit" - "ועד בית". It's not really a tax as such though you'll have to pay it whether you like it or not. In fact whatever it costs - whether 50 Shekel a month or 250 Shekel a month or even more - whatever the administrator of the fund demands is a new liability for you each month! It's true, someone must take care of the building expenses, but what about when you're always doing your best to keep things clean. In that case, you'll find yourself constantly bombarded with bills of others to pay (with those in the wrong constantly let off the hook!) - those who prefer to hire real help to keep things clean, rather than do it themselves. It's the Vaad Bayit who puts up the signs you'll see plastered all over your building - notably like the one in the picture below (click image for full size) which clearly indicates, "Dear Neighbours: Please do not leave prams in the passage-way". Of course, if you do know about Chutzpah - you may want to use it - and be Davka -דוקא - another word that's just so hard to translate. It means something similar to - "just because you said no... I'm all for it!" though literally it means "exactly!"

So here it is. If you were to look up the word Chutzpah in a dictionary, you'd be sure to see this image and maybe even the one below it. For those striving to make their apartment building clean and tidy - don't be surprised when you're hit with large Vaad Bayit bills. They are really there - especially for you - so that you can pay the bills for the Davka type of neighbour who knows not much more than what real Chutzpah really means!

Bituach Leumi Difficulties - Be Careful!

If you're new to Israel, one regular tax you need to be aware of is "National Insurance" otherwise known in Hebrew as "Bituach Leumi." Though this post is not concerned with the amounts you'll be paying, nor individual details, it is known that the minimum current amount paid by anyone (18 years and over) breathing in the holy air of Israel is ₪154 per month - whether employed or not. If you do earn any income while living in Israel, there is a complete listing of amounts earned together with amounts due to Bituach Leumi for tax purposes. Money received by the national insurance is supposed to take care of general "free" medical attention and other emergencies such as when one is unemployed (though a closer look at things may not make sense i.e. read the second sentence of this post again!)

One can pay one's dues at a post office, in person at Bituach Leumi's offices or even using the Internet with one's credit card. At various points in the year (or perhaps once only at the beginning of the year) one is issued a booklet with amounts due and by which dates those amounts are due - so making payments can be "easy."

Be warned however, you must pay attention to amounts you are being charged on a regular basis. In the event that you miss a payment, you will be fined a penalty - immediately to the amount of one shekel (usually!) There is no going back or making excuses for a one day late payment. If, on the other hand you have not informed Bituach Leumi of an increase in a month's earnings, you may find yourself owing Bituach Leumi not only an additional amount, but a heavy penalty tax of hundreds and even thousands of shekels immediately! It is not an easy thing to get off this and has been known to result in severe depression, panic and other difficulties to those hit suddenly with these amounts unknowingly!

Though all this applies and is completely "legal," keep a watch on what Bituach Leumi might be doing behind your back! A recent Oleh notified us of their honesty in making regular payments. They were required to pay some 250 shekel per month - which they do regularly via the Internet. A couple of months ago, Bituach Leumi returned their payment indicating that it was not needed. The next month, a payment was made again - and this too was returned to their account, indicating that payment was also not necessary. But suddenly Bituach Leumi "remembered" that payment was necessary after all, now charging them for the next month with a penalty of 2 shekels for not having paid their Bituach Leumi (perhaps for the previous two months?!) See graphics below:

The first graphic (see right hand side) clearly indicates 499 shekels return (254+245) - the last amount of 254 shekel was returned on the 4th December. Yet notice in the second graphic, the headings:

קרן - Monthly Amount - 245

קנסות - Penalties - 2

סה"כ חוב - Total Debt - 247

Notice the date when payment was due by (third graphic) - 15 December. Payment was clearly made just 11 days earlier... but after refunding the victim, Bituach Leumi debited him with the amount and another 2 shekels penalty (maybe because he paid early?!)

Indeed Bituach Leumi were one up on the innocent victim by returning the money that had been paid to them by the victim - back into the victims bank account - and then charging a penalty fee for "payment that was not made"!)

So what does this do to the victim practically?

It causes a loss of "penalty" money that should never have been taken. In effect Bituach Leumi have taken something that was never theirs in a perfectly "legal manner!"

There is another loss to the victim - and here's when the 2 shekel amount turns into a much larger loss! In his accounting records, the victim will have to now declare another 499 shekels as income - call it "compensation from Bituach Leumi" and be taxed on that!  The accountant will view this as income from Bituach Leumi or perhaps even "compensation" from them. In addition to this, should the victim be in need of Arnona (land tax) assistance or anything else - where a copy of the bank statement must be produced, the authorities will see that Bituach Leumi are already helping the victim, causing the possibility that the additional help needed will never come about! 

NOTE: As far as the Iria (Municipality) is concerned, an income of just 2000 shekel is considered enough to pay for a full month's expenses, and therefore not deserving of the discount for Arnona.

Be warned! Bituach Leumi, Arnona, banking fees and other taxes may tax and deduct whenever it pleases them. Should you find yourself in such a situation it is best to consult with a professional immediately.

Remember, your 2 shekels may not seem like much (as a start) but if we do not fight these things together, then effectively Bituach Leumi can be quite "legally" gaining some 14 million odd shekels for forbidden activities each month - by simply taking just 2 shekels from each citizen of Israel - all in the name of an honest penalty!

Have you been cheated in Israel by anyone? Tell us your story. We want others to know and to be warned.

* This post is not written by an accountant or legal representative but is based upon real tangible evidence in a victim's personal situation.

Charedi Housing Crisis

Charedi Housing Crisis may indicate Larger Trend: If there's anyone wondering about the difficulties the religious communities are experiencing in terms of being able to purchase their own home in Israel... they may wish to think again as the problem is simply indicative of a much larger problem that could affect those... who are not religious as well: Visit this link on Matav.com for more information.

We need to start sticking together truly helping each other out, rather than turning a blind eye... We're all in the same boat together. The hole being drilled under "that person's" seat on this mighty yacht called Earth, is not just affecting them, it's affecting us all.