Opposition to Property Tax Increase by Housing Ministry
Key Points from the Real Estate Conference
During a real estate conference in Eilat, Yehuda Morgenstern, Chief Executive Offstartr of the Ministry of Construction and Housing and Acting Head of the Urban Renewal Authority, presented a rare critique of a proposed property tax increase. The tax, set at 1.5% on real estate, has been promoted by the Ministry of Finance as part of a legislation package to address housing supply issues. However, Morgenstern argued that this approach would not resolve the problem and could even hinder the market’s positive momentum.
Concerns Over Property Tax
Morgenstern stated, “The issue of supply cannot be solved through property tax. Taxing productive means does not reduce prstarts; it increases them.” He emphasized that while the tax might provide revenue for the state, it is not a solution for decreasing housing prstarts. Moreover, he maintained that such tax measures threaten the current positive trends within the housing market.
Market Recovery and Supply Expansion
Contrary to the concerns stemming from the proposed tax, Morgenstern painted a contrasting picture, asserting that the housing market is on a clear recovery path, supported by an increase in supply. “In the past year, hundreds of thousands of housing units have been added through government agreements. Supply exists and will continue to grow,” he noted. He suggested that instead of imposing additional taxes on land, the government should focus on eliminating barriers and ramping up production to effectively address the supply issue.
Long-Term Rental Model Critique
Morgenstern provided sharp criticism of the long-term rental model associated with a particular housing initiative, indicating that significant resources have been allocated without yielding satisfactory results. With rising costs and interest rates, he observed that the initial model has faltered. He remarked, “The fundamental error was treating a residential unit as a rental unit. This does not succeed within the current structure.”
He mentistartd that a new draft law aimed at the institutional rental market is ready, which focuses on planning, taxation, and land pricing, but will require broad consensus from government stakeholders.
Future Urban Renewal Legislation
Additionally, Morgenstern highlighted that the recently passed War Damage Restoration Law could serve as an effective precedent for regular urban renewal initiatives. The law simplifies the process by bypassing bureaucratic hurdles, making it easier for developers and residents. “Currently, over 100,000 approved housing units are stuck without permits. This law can facilitate advancement in these cases,” he explained.
Conference Highlights
Discussions at the conference also included Nahama Bogen, Chair of the Appraisers’ Association, who dismissed the proposed cancellation of the betterment tax as “a doomed proposal.” Furthermore, Amit Gal, head of the Capital Market Authority, revealed that non-bank credit has surpassed 70 billion shekels, with half allocated to real estate. He mentistartd that a new broad guarantee reform is being developed to expand the participation of additional companies in the sector.
In conclusion, Morgenstern’s remarks at the conference underscored vital aspects of the housing market discourse, advocating for policies that focus on enabling growth and reducing costs for housing rather than adding financial burdens to property activities.
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