The Law on Splitting a Land-Attached Housing Unit

The Israeli Law on Splitting a Land-Attached Housing Unit 

On August 7, 2017, the Israeli Bill on Splitting Land-Attached Houses (Amendment No. 117 to the Planning and Building Law) was enacted.

This Amendment was intended to assist in the housing shortage in Israel and the severe shortage of supply of small apartments for persons looking to rent.

The Amendment, which was passed after several months of deliberations, allows the Local Planning and Building Committee to give ‘relief’ regarding the limitation on the number of housing units  permitted to build on one land, by way of splitting an existing housing unit, subject to several conditions:

• The housing unit to be split is a land-attached unit, which is built on a property which fits no more then 4 apartment per dunam (1000 m²).

• The area of ​​the land-attached unit to be split is at least 120 square meters.

• The area of ​​the residential unit to be added shall not be less than 45 square meters, and will include a separate kitchen, toilet and entrance.

The new residential unit, added as a result of the split, shall be used for rental only or to house relatives (spouse, parents, grandparents, children, siblings and their spouses), but it shall not be possible to transfer ownership of the property to that relative.

In addition, the use of the new housing unit will be solely for residential purposes and cannot be used as an office or clinic, for example.

The new Israeli law will apply only to single-family housing units in cities (not to buildings) and will not apply to Moshavim and Kibbutzim.

After negotiations with the local authorities, it was decided by law that the persons splitting the units will pay a reduced capital gains tax of up to two thirds only of the total tax, with the first part of the tax being collected when the unit is split, and the remaining two-thirds to be collected only if and when the owner decides to sell the unit (that includes 2 residential units after the split), and thereby realize an increase in value.

During discussions on the new law, it was decided that at the time of the split, it would be possible to turn an area of ​​up to 60 square meters defined as a basement, into a main area for the purpose of constructing an additional residential unit.

In addition, it was determined that it would also be possible to use for this purpose an area designated as storage (up to 7.5 square meters).

It was determined that in housing units where  a reinforced security room is installed, the local municipality is entitled to demand that the owner of the property install a reinforced security room in the new housing unit as well. If reinforced security rooms in the housing units that were split are not installed, the residents of the new housing units will have rely on existing solutions for residents of the area, such as public shelters.

Hence, the local municipality cannot demand that the owners install a new security room in the new housing units.

The housing market assessment is that tens of thousands of owners of land-attached housing units will try to render split units fit for use, thereby improving their properties.