Israeli government will compensate for construction freeze losses in Judea and Samaria
Posted on 10. Mar, 2010 by Buy-It In Israel Staff in Israel Real Estate
Construction freeze on the West Bank
The government of Israel is planning to compensate builders, residents and homeowners who have been financially affected by the real estate construction freeze in Judea and Samaria. On November 25th, Israel issued a decision on a freeze of construction permits in Judea and Samaria for a period of 10 months. Apart from the political ramifications, the ten-month freeze on all Jewish construction in Judea and Samaria is causing losses to contractors, home purchasers, architects, municipal councils, real estate agents, building material companies, and more.
At the beginning of March, Prime Minister Benjamin Netanyahu, approved an outline for general terms of compensation for the various elements that were adversely affected by the decision for a temporary suspension of new construction in Judea and Samaria. The outline was prepared by a team led by Cabinet Secretary Tzvi Hauser, with the participation of professional representatives from the Finance, Defense and Justice Ministries, as well as from the Prime Minister’s Office but the exact criteria are still being debated.
In the framework of the outline, it was decided to set uniform criteria, for providing compensation, on three tracks: To those who purchased apartments, to contractors and those with building permits and one-time compensation to those local councils that were adversely affected by the decision. The detailed criteria are expected to be issued at the end of March. It should be emphasized that this decision requires neither legislation nor approval from additional forums; therefore, it may be implemented immediately.
Meanwhile, data released by the Knesset Research Center, estimates that the freeze has delayed work on 3,000 new homes in the settlements. According to figures by the Central Bureau of Statistics, building permits for the construction of 2,023 new apartments in Judea and Samaria were issued in 2008. Final figures are not yet available for 2009, but according to Knesset Research Center estimates at least 2,000 new local permits for apartments have been allocated last year for projects approved by the ministry before Prime Minister Binyamin Netanyahu took office.
The Knesset Research Center report was triggered at the request of Knesset Member Danny Danon (Likud) as part of the initiative to make compensation available for homeowners and contractors who have taken a financial hit as a result of the settlement freeze. The calculation for compensation was drawn up on the assumption that the families who owned these homes now had to pay an extra 10 months of rent while they waited to resume building. Since there are major differences in rental prices depending on the area and size of homes, compensation is expected to be given on the basis of average monthly rental prices of between NIS 2,500 to NIS 3,500.
In practice, compensation for this rent could cost the state NIS 90 million, the report estimated, not including financial damage to contractors and their employees, as well as the loss of fees to local settler councils. The NIS 90 million figure is based on the assumption that compensation will be provided for 3,000 homebuyers and the average monthly rent in Judea and Samaria is NIS 3,000. Danon has estimated that total compensation for the 10 months could reach NIS 160 million.
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