Amendment 101 to the Building and Planning Law was promulgated in April 2014. The amendment concerns a transfer and expansion of authorities to the local committees and sweeping amendments designed to shorten, streamline and simplify construction licensing.

Following is a brief review of the amendments, which shall come into effect on January 1, 2016.

Three construction licensing tracks were defined:

Structures exempt from a permit requirement – light-weight structures, such as storage sheds, pergolas, awnings, fences, winter-time enclosures and more (this amendment came into effect at the beginning of August 2014).

Fast-track permits – structures (to be defined by the Minister) that are unlikely to pose a substantive hazard or disturbance, or to have a material impact on the appearance of the building, on the environment or on their character or characteristics. This track relates to building additions, such as apartment protected spaces, porches, small rooms of up to 25 square meters, elevators, enclosures of open pillared storeys, and more.

Standard-track permits – the amendments relating to fast-track permits will come into effect on January 1, 2016, which shorten the waiting time until the authority must issue its response to 45 workdays. In cases whereby a response is not issued, then the permit application shall be deemed an approved permit. According to the amendments relating to standard-track permits, if a permit is not issued after 90 workdays, the applicant may file an appeal to a district appeals committee authorized to issue the permit.

The law specifies the work stages, procedures and timeframes for the issuance of construction permits, completion certificates / Form 4 / use and occupancy permits.

External planning and building control and inspection institutes are to be established

The main objectives of setting up external institutes are to centralize all approval authorities (municipality and local committees) and professional controllers and inspectors in a one-stop format. The amendment prescribes provisions regarding the establishment and accreditation of authorized control and inspection institutes, and defines roles: design controllers, who are responsible for verifying that the permit complies with the building code provisions addressing the building’s stability and safety and suitability for use; and construction inspectors, who are responsible for verifying that construction is being executed in compliance with the building code.

Online permits – the legislation includes instructions for filing online applications for building permits.

Affordable housing – besides the issue of licensing, another section of Amendment 101, which addresses the issue of affordable housing, Addendum Six to the Planning and Building Law comes into effect on January 1, 2016. Inter alia, the amendment authorizes local committees to approve plans for adding construction lots and for adding public uses, including rental housing, which will apply to buildings and lots defined in plans as being intended for affordable housing.  

Update about planning and building amendments anticipated in the proposed State Budget for 2015-16, which was approved by the government on August 6, 2015 

As part of the efforts to resolve the housing crisis, a number of additional legislative amendments have been proposed in resolutions of the Israel Land Council and in National Outline Plan 35 that relate to planning and infrastructure and real-estate registration. The purpose of the amendments is to increase the supply of apartments in the market by removing barriers and by accelerating the pace of land development and the planning and construction of apartments.

Briefly, these amendments include: increasing the number of local planning committees and expanding their authorities, streamlining of parcelization and partitioning procedures, accelerating the construction and marketing of State lands, government funding for the planning of privately-owned housing complexes, lowering of infrastructure barriers, encouraging development agreements between local authorities and entrepreneurs, building permit exemptions for particular types of national infrastructure works, uniform primary legislation on the subject of development payments in local authorities and converting buildings currently deemed under nonconforming use to apartments for residential use.

Update about proposed amendments to the Land Taxation Law relating to residential apartments within the scope of the proposed State Budget for 2015-16

Within the scope of the housing market reform and in order to increase the supply of residential real-estate and housing, a number of amendments to the Land Taxation Law have been proposed within the scope of the proposed State Budget for 2015-16.

Following is a brief review of the proposed amendments:

Temporary order regarding real-estate sales by individuals

One proposal is for the issuance of a temporary order for a three-year period, prescribing that when individuals sell land intended for residential use, the land appreciation tax will be calculated according to the actual appreciation up until November 7, 2001, and will be at the rate of only 25% (in lieu of a tax rate that can even reach about 50%). The criteria for qualifying for the aforesaid reduced land appreciation tax rate are: (1) the plan for the property being sold allows for the construction of at least 10 residential apartments; (2) the purchase date of the title to the property being sold is between April 1, 1961 and November 5, 2001; (3) if it is possible to construct at least 1,000 apartments on the property being sold, the sale is to a contractor for whom the property shall constitute business inventory; (4) if less than 1,000 apartments may be constructed on the property being sold, the construction of 80% of the apartments or at least 10 apartments (whichever is higher) has been completed within 28 – 48 months of the transaction date (depending upon the number of apartments). 

Exclusions to the tax relief are defined in the proposed amendment, such as: in instances of sales to relatives, sales for no consideration, tax-exempt transactions (whether fully or partially), rezoning, and transactions by property associations.

Shortening of timeframes for selling secondary apartments in order to pay reduced appreciation tax and purchase tax:

Another proposal is to shorten the timeframe during which a buyer undertakes to sell his secondary apartment, in order to pay reduced purchase tax in respect of a sole residential apartment, to 12 months (instead of 24 months), and to shorten the timeframe during which an apartment seller shall be deemed as owning a sole residential apartment, if he purchased an additional apartment during the 12 months preceding the sale (instead of 18 months).

Limiting of the exemption period for an inherited apartment to two years after the date of the testator’s death:

Currently, there is no time constraint on receiving the exemption. According to the proposal, the exemption period shall expire after two years, except in the following instances: (1) if the testator’s spouse is one of the surviving heirs; (2) if the testator’s offspring is one of the heirs and has not yet reached the age of 21 (the exemption period expires two years after he reaches the age of 21); (3) if the testator’s offspring is one of the heirs and has ward status (the exemption period expires two years after he ceases to be deemed a ward).

Seller who makes use of an inherited apartment in order to sell a secondary apartment as a sole residential apartment, will not be able to sell the inherited apartment under a sole- residence exemption:

Proposal to prescribe that a seller who sold a residential apartment as a sole residence, under the presumption that the inherited apartment will not be deemed a secondary apartment, will not be allowed to benefit from a sole-residence exemption when selling the inherited apartment.

Residential apartment sales – exemption on the taxable inflationary sum when calculating inheritance tax:

Proposal to prescribe that, when using a new linear calculation of the appreciation tax on a sale of a residential apartment, an exemption should also be given on the taxable inflationary sum, in respect of the exempt portion of the appreciation. The proposed amendment is to take effect retroactively from January 1, 2014.