Buy-It In Israel

The cost of bureaucracy in Israel

Posted on 15. Jul, 2010 by Buy-It In Israel Staff in Buying On Paper, Israel Real Estate, Miscellaneous

At the beginning of the year, the government announced reforms in Israel real estate planning and construction procedures and infrastructure building to make affordable housing available and help to close social gaps. The government plans to enforce reforms within the Israel Land Administration to facilitate and shorten waiting times for building permits and simplify planning procedures with the aim of lowering housing prices. The planning and construction reform is built on three pillars:

1. Reform of the Israel Land Administration;
2. Reform planning and construction committees to cut the bureaucracy; and
3. Engage in road-building and train transportation from the Negev to the Galilee.

Last week, representatives of the planning and construction sector and environmentalists urged Prime Minister Netanyahu and the Israeli government to divide the planned reform in the construction sector into two: permit-issuing and long-term planning. Otherwise the representatives fear that simultaneous implementation of the planning section of the reform will make things worse than they are now, and could lead to chaos in the sector. As a result, planning and construction mechanisms may not become faster, especially the process of issuing building permits.

The bulk of bureaucracy involved in the process of issuing permits in the new construction sector makes up nearly six percent of the purchase price of a real estate in Israel, according to a study by the Israeli Contractors Association. Bureaucratic processes and delays in the approval of construction permits with which a contractor has to deal with, generates an additional cost of NIS 90,000 for the individual buyer to the price of an average four-room apartment at NIS 1,500,000.

Currently, the apartment planning stage in Israel takes five to seven years on average because of the bureaucracy in the planning institutions and delays in the approval of building permits, compared with an average of one year only in other western countries. Even without any special requests, the approval of planning construction permits can take a minimum of two years. If changes or corrections are needed to be made to construction plans, the process can take between three to four years.

Instead the reform should immediately advance measures to cut red tape and speed up Israel real estate permit-issuing, while gradually implementing the planning reform, which includes long-term and far-reaching decisions over public spaces and thus requires a more careful and professional process.

© Copyright 2010.

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