Renting in Israel - Draconian Conditions - The Wild West!

You may have already read a recent post on this blog, "Radio Interview: The Costs of Renting in Israel - From a View of a Minister of the Knesset." We saw how the rental situation in Israel is currently out of control. In short, there are no laws to keep rental costs in any kind of balance. Landlords are given permission to charge what they like - when they like. The tenant is warned in the strongest of terms "caveat emptor" - or "let the buyer beware!" In our case - let the renter beware. A Minister of the Knesset - Minister Hilik Bar spoke out in the strongest of terms regarding the desperate situation renters find themselves in with prices what they are - and that even for someone like himself, he could see no way of buying an apartment for himself given the massive amounts of money needed to even make a start - to one's start!

Recently another Minister of the Knesset, Stav Sapir - came out as well in the strongest of terms regarding the "Wild West" situation of the rental situation in Israel. This time, it's not only the awful situation of costs that are involved, but the fact that landlords are practically given permission to treat their tenants in any way they wish. Indeed, renting an apartment without proper running water, electricity and various other dangers(!) can be the norm. As pointed out on www.jersualemonline.com, "...hundreds and thousands of Israelis and (sic) forced to live in apartments that are missing even the most basic of accommodations." The situation is indeed desperate, and more needs to be done to ensure that there is a measure of honesty from the landlord who is actually being paid by his tenant for the right to have a normal in-working-condition apartment.

Famous other problems - never to be attended to by the landlord - include wide open areas allowing doves to fly into the home, build nests and breed a new family, exposing of electric wires (an actual life threatening situation!,) unleveled floors (another opening for an accident,) allowing neighbours to build "at the expense" of the landlord's tenants who must forgo use of parts of their apartment during building, broken shutters (a building fault, not just needing a change of strap,) not allowing tenants to hang their own paintings on the walls, non-working radiators or yunkers (established as part of the contract), rental of broken, old furniture indicating the apartment as rented with furniture(!) It is clear, landlords have a monopoly. The tenant has no choice but to sign a contract which gives the landlord full rights to treat his tenant as he wishes. His only other option is to sleep on the street if he finds that living in an apartment without proper windows(!) air(!) water(!) or electricity(!) is not to his liking! Very often landlords will even go so far as to claim that they will indeed attend to the many needs in the apartment - as soon as the contract (Chozeh) is signed, yet you can bet your bottom dollar - that the next day he will have already forgotten his conditions. Writing them down is of course an insult to the landlord who wonders why you cannot simply trust him!

For those living in (normal) homes overseas, almost all have no idea of the circumstances forced upon tenants living in Israel to live in. They cannot believe this is true, often claiming that the law is the law and one may certainly take a landlord to court (at the cost of the tenant who already lacks money!) and have the courts straighten matters. There is a certain ignorance among those living overseas, and I am glad to see the issue finally coming out a lot more in the open in a variety of news sites.

It seems that because there are indeed Ministers of the Knesset themselves affected by these problems, that they are coming out into the open a lot more now and it is vital that the public educate themselves to the reality of the practical oppression to those unable to afford their own homes. Buying in Israel today has become a virtual impossibility for the minimum wage - average - labourer. That being the case, it is vital that proper laws protect the tenant - and more importantly that the public become educated to support the case for honesty in all matters related to rental and rental conditions. Remember - it may well be that you could find yourself in this same situation one day. Better to support the case for honesty in rental today - than to find yourself one day up against it when you may be the one in need!

For a more authoritative view on the problems of the "wild west", see the news in the jerusalemonline.com, "New Law to Protect Renters of Apartments from Draconian Conditions." What a superb word to describe the horror!

Ghost Apartments

Have you heard of "Ghost Apartments". Can it be possible that a small country which requires every house / apartment to be available for families to inhabit can actually stand empty? Our friend Raphi Bloch explains this strange phenomenon in his article below.

One of the phenomenon relatively unique to Jerusalem is the “empty apartment” or as the Israelis call it, the “ghost apartment”. This is a property which stands empty for most of the year and is used by its owners only on Jewish holidays or during the holiday season. There are a large number of these properties in the city and even complete residential complexes which are totally uninhabited during the off-season.

The advantages to the owners of not renting out their apartments when not in use include absolute flexibility in setting dates for personal visits and the comfort of knowing that your vacation home will be as you left it when you return. The flip side of the coin is that these homes continue to be liable for municipal taxes, building maintenance and various other expenses which are normally covered by the tenant if the apartment were to be rented out.

From the point of view of the government and the municipality these apartments provide another potential source of rental housing in a city where the demand for rentals far exceeds the supply. To encourage owners to enter the rental market a number of new laws have already passed the committee stage in the Knesset , the major one being that apartments that stand empty for the majority of the year will be subject to double municipal taxes. This will make leaving an apartment empty an expensive exercise.

Despite this there will still be many owners who feel that the costs justify the benefits of not renting out their apartments and so the “ghosts” of Jerusalem will be here for some time to come.

Shalom From Jerusalem
Raphi

Were you aware of this trend? What are your thoughts? If you had the means to purchase an apartment in Jerusalem, would you leave it empty most of the year or would you come and live here yourself? 

To Buy or to Rent - Guest Post

                           Networking in progress

A friend of ours, Raphi Bloch,  recently began a blog about the property market in Jerusalem. Here is one of his early posts, posted here as a guest post with his permission.

This post is on the topc of whether to buy / rent It is linked to his blog so do visit him too.

Many of those looking for a new home in Jerusalem approach me with the question “should I buy or should I rent ?”  Although there is no one answer to the question there are many considerations which help one come to the answer that is right for them.

Many economists claim that renting makes more economic sense in that once you have factored in finance costs, buying costs more over he long term. While this may be true in a market where property prices are unstable, Jerusalem property generally retains and even increases its value over the medium to long term (the current downturn not withstanding). Add to this the fact that rentals in Jerusalem are comparatively high due to the high demand by students, visitors on one year programs and young families who as yet do not own their own home and you will often find that the difference in the rent paid and the cost of servicing a mortgage is very small.

However not everyone has the luxury of being able to buy. Banks in Israel are very strict on the amount they will finance on a mortgage with the norm being only about 60% – 70% of the assessed value of the property which is normally quite a bit lower than the market price. This means that a potential buyer needs to have about 40% of the purchase price as a down payment . There are mortgage insurance companies who do enable one to take a higher mortgage but again not everyone can meet the requirements to qualify.

Buying does have many non financial advantages. When living in your own apartment you have the security of knowing that you will not be asked to move at the end of a lease as well as the luxury of renovating your home to meet your exact taste. The argument that one does not always know if in a few years you will need to move,for example changes of jobs or family size, is one that many pro – renters often quote. Two options exist for the homeowner – renting out the current apartment which as I mentioned above is an easy task in Jerusalem or selling and buying another home – again relatively easy over the medium to long term.

Many of my buyers tell me that one of the strongest reasons to buy as opposed to renting in Jerusalem is the emotional one – knowing that they own a property in the Holy City. While this is obviously subjective it does explain why many investors insist on buying in Jerusalem when on paper there are better investments elsewhere in Israel and indeed the world but this is a topic for another post at a later date ……….

Shalom from Jerusalem

Raphi