Building maintenance and property management costs in Israel
When buying or renting a property in Israel it is important to find out if and how the building is maintained and the magnitude of the fees involved, before signing a contract.
In Israel the maintenance or management of an apartment building is determined by a committee of homeowner representatives called Vaad Bayit or building committee. There are two forms of maintenance management common in Israel. In the past, many buildings, in particular, if there are only a small number of tenants, were managed by homeowners themselves, who elect a main representative and a treasurer, who would often get exempted from paying monthly fees or pay reduced fees. However, although this form of building management can be cheaper, it can also be very time-consuming, burdensome and is often the cause of headache and disputes among homeowners, neighbors, and tenants in terms of collecting monthly fees and getting emergency repairs done at any time of the day or night.
Therefore, in recent years, in particular in light of the emergence of high-rise apartments with multiple tenants which can range between 30 to 60 and more apartment units, many buildings opt for hiring the property maintenance services of an external management company chosen by the Vaad Bayit. As with most services in Israel, it is advisable to conduct market research and get a number of price offers from maintenance companies, which may also leave room for price negotiation with the preferred company. Once a suitable maintenance company is selected, 50 percent of the homeowners need to give written approval of the choice at a Vaad Bayit meeting, for the hiring of the company to take effect.
Vaad Bayit monthly fees for each tenant in the building will depend on the size of the apartment and the floor the flat is located. By law, the bigger an apartment in size and the higher it is located in a building, if there is an elevator, the more the tenant of the flat needs to pay in shared maintenance fees. In general, Vaad Bayit fees cover all of the shared basic expenses to maintain the building from cleaning of the stairway, elevator maintenance, electricity in the hallway, gardener, central heating, and other amenities. Vaad Bayit monthly payments can vary between NIS 80 at the low-end to NIS 3000 at the high-end. In luxury buildings, shared maintenance expenses can be significantly higher because of additional costs of the shared usage of a swimming pool, a gym, extensive security system, or porter service.
It is recommended to set up an independent bank account in the name of the building for the sole usage of the payment of shared financial maintenance expenses of the building and one which can be checked by the homeowners at any time. This is particularly important when hiring an external management company. Furthermore, the building committee should become a member of Aguda Letarbut Hadiyur (Housing Culture Society), which is a good source for information to handle disputes in the event of a conflict.
When hiring an external maintenance company it is available to find out the conditions of availability of their services whether there is an emergency line for tenants every hour of the day, every week of the year (excluding Yom Kippur). Similar questions include whether urgent incidents as well as simple ones and requests for service late at night or on weekends are taken care of as soon as possible per the nature of the problem. If there are emergency services offered by the maintenance company it should be clarified whether they are part of the basic management costs of the building or whether additional costs will be charged on emergency services provided during out-of-work hours and on weekends or holidays. As a customer of a property management company, you are entitled to know exactly what is happening with your building at all times as well as to receive an elaborate report on a quarterly basis.
In response to the boom in Israel real estate buyers by foreign residents and investment buyers, property management companies have started in recent years to offer services tailored to homeowners who live outside of Israel and are unable to physically take care of their assets. Services range from maintenance availability 24 hours 7 day a week, constant care of the tenants and property if rented out, access to the management company’s pool of professionals in order to fix faults in the property, and access to legal services. Fees for basic property management services can range from 8 percent to 15 percent of annual rental fees including VAT.
Other overseas packages offered by maintenance management companies are personally tailored to foreign homebuyers using their property as a holiday home with services ranging from cleaning of the apartment prior to the owner’s return and at any other time per the owner’s request; watering plants and/or yard; continuous care of all bills; access to pool of repair professionals; handling mail (including sending to the customer’s residence abroad); buying groceries prior to the owner’s return and to their request; taking care of special arrangements; laundry services; and other custom services such as airport pick-up, car rental, etc. The fee for this type of package is fixed on a per case basis depending on apartment size, location and extent of service needed.
The contents of this article are designed to provide the reader with general information and not to serve as legal or other professional advice for a particular transaction. Readers are advised to obtain advice from qualified professionals prior to entering into any transaction.