Yitzhak Goldknopf, November 9, 2023/Reuven Castro
Last night (Sunday) the three ministers, Finance, Housing and the Interior, announced the bombastic plan to save housing in Israel in 2024. Among the sections of the plan, in light of the low response in the past year from entrepreneurs in the RMI tenders in the periphery, it was decided that the development expenses, which accompany the purchase of the land and make it very expensive, will be subsidized at a higher level by the state.
According to the decision, the increase in the subsidy for development expenses in real estate tenders will reach up to 70% of the cost in the northern border area, and the subsidy will be deepened on lands located up to 9 km from the borders with Gaza, Lebanon and Syria.
"Increasing the subsidy of development expenses in real estate tenders up to 70% of the cost in the northern border area," the plan states;
An innocent person reading this sentence may still believe that there really is a subsidy of 70% of the approved development costs.
Beyond the fact that the supply of available land in the border settlements is low anyway, and this step will not significantly change the market,
this is an oversight.
I will explain:
(1) Resolution 561 establishes a category of A1, which is the highest category for development cost subsidies;
A vast majority of the Heddar settlements are classified in group A1.
(2) The title of group A1 is "up to 70%" subsidy, but no more than the subsidy ceiling stated in Resolution 561. The subsidy ceiling - was set in March 2016, and this is a very low ceiling in the northern settlements where development costs are very expensive.
(3) I will give a practical example: Zerait - a settlement that is A1;
Approval of development costs and approval of subsidy from 04.12.2023;
The cost of the approved public development is NIS 551.7 thousand according to the May 2023 index;
The scope of the subsidy is NIS 172,000, and this is in light of the fact that it is a maximum slope of 20%.
(4) This means that the effective subsidy is not 70% but 31.1% of the cost of the development.
(5) A vast majority of the settlements within a range of up to 9 km - Lebanon and Syria - are in the A1 category (more than 70 out of 95).
The Northern Frontier/Reuters
(6) Another example: approval from 12.25.2022 for the Yonatan cooperative seat in Golem;
He is the best A1;
A total subsidy of NIS 113.8 (NIS 96 thousand according to the March 2016 index) out of the development cost of NIS 262.8 thousand;
Again - an effective subsidy of 43% and not 70%.
All these prove that there is no basis for the description of 70% subsidy.
All they did was promote a cluster of settlements from A2 to A1 (a minority of settlements).
In conclusion, this is a completely minor correction;
In most of these settlements there are no marketing plots at all.
This may help a settlement like Netor - and it is a proper decision - but it should be emphasized that at least most of the settlements are in A1.
The appropriate step would have been to give a 70% subsidy as stipulated in settlements that are A1, and not to leave the external sign and in practice - to give a much lower rate.
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