Permits, TABA, TAMA 38 and Urban Renewal
You’re purchasing a piece of real estate in Israel and you want to make the most of your investment; or, you are already a home-owner and you’re wondering whether it’s worth the trouble to add an extra room.
You live in an old, run down building and you want more space, or to add more value to the property so you can trade up.
In all of these cases, you have at your disposal the biggest investment most people will make their whole lives – a piece of Eretz Yisrael – and you’re looking to make the most of it that you can – for your personal comfort and for your economic future.
Will it be worth it? How do you do it? Where do you start? Who pays for it?
Here are some of the most common ways of increasing the value of your property in Israel today.
Permitting for construction
Every piece of land has a governing Town Plan (TABA) that defines its building rights – how much can be built on that piece of land. If your current property hasn’t utilized all of the available building rights, then with a Permit procedure at your local authority, you can build the maximum on your land or add on to your existing building.
An architect can help you to analyze what rights you have, how much you’ve used, and how much is left. Remember that building costs per square meter are significantly lower than selling prices per square meter, so whatever you put into your home, you’re going to increase the property value by much more.
Town Plan Change
If you’ve already utilized all of the building rights available to you, you can apply for a change in the TABA to increase your rights. This process can take longer, but can greatly increase the area of your building and therefore the value. Sometimes this is the only way to increase the size (and value) of your home or asset, and it’s well worth the effort. Even the increased rights, without actually building the extension, are worth money. A built extension doubly so.
Over the years I’ve helped many home owners, developers and contractors add to the value of the land they started off with. It’s important to understand the rules, the planning policies of the relevant bodies and the process, but once you do, this can be the major key to increasing value.
If you live in an older building made up of several apartments, you can utilize the National Master Plan for prevention of earthquake damage (TAMA 38) to significantly increase the size and value of your apartments. You accomplish this by having your architect apply for a permit (without the need for a change in Town Plan) that allows each apartment to add 25sqm, and the whole building to add between one to two and a half floors. Those floors can be used by the original residents, or sold off to pay for the improvements in the original building, or a combination of the two.
This process is most often done or by a developer who will take on the costs of improving the existing apartments in return for the profits of selling the new floors. However, it can also be done by the residents themselves, with the appropriate professional accompaniment.
I’m currently working on such a project in Baka in Jerusalem, where the residents will both end up with larger apartments as well as a share in the profits of the sale of the upper floors. In the end, the property value is increased; the structure is protected against earthquakes and the building is rejuvenated (adding elevators, balconies, parking, storerooms etc.) without the residents having to pay for the construction costs out of pocket.
If the land value is high enough, it’s often worth using the second article of the Master Plan (TAMA 38/2), which allows demolishing the original building entirely and rebuilding with the building rights as above.
This is a government incentive plan that is starting to make huge changes, including in Jerusalem, with the major benefit of being exempted from paying betterment tax.
If your neighborhood is older the apartments may be run down and the infrastructure could need updating. The apartment may not be large enough for your current needs and you’d like to do something about it, meanwhile increasing your property value. The right solution may be Urban Renewal (Pinui Binui). Urban renewal is somewhat of a national priority right now. Older buildings are demolished and rebuilt allowing residents to upgrade their homes to larger apartments in newer buildings, with parking and storage rooms attached, without incurring personal costs.
I’m currently involved in two such plans in Jerusalem, having received initial permission from the committee for urban renewal, and moving forward matching up the needs and desires of the residents, the municipality and the developer. The catalyst for starting such a project can come from the city, a developer who’s identified a good location, or from the residents themselves.
Could any of these approaches be right for you?