The Ministerial Committee for Legislation is expected to approve next Sunday the proposal of the Minister of Construction and Housing, Zeev Elkin, to amend the Sale Law, which is intended to protect homebuyers, so that they know what price they will pay at the end and avoid unnecessary linkages to the input index.
The purpose of the law is to make it easier for young couples to purchase a first home and reduce the unexpected costs as much as possible.
According to the ministry, the law will save apartment buyers hundreds of thousands of shekels.
After the committee's approval, the law will be debated in the Knesset, and will then be discussed by the Finance Committee, headed by MK Alex Kushnir.
"Israel Today" has learned that in order to apply it to the prices of apartments marketed as part of state tenders (such as a target price), no legislation is required, but the approval of the Israel Land Authority is sufficient.
Next week, the Rami Council's approval will limit the linkage in state tenders to a target price immediately. In fact, any developer or contractor who submits tenders after the Rami Council approval will be required to meet this condition.
Minister Zeev Elkin, Photo: Oren Ben Hakon
What does the law include?
Also, as part of a complete process in the Ministry of Construction and Housing, a department was recently established in the Department of Home Buyers Protection, to address many inquiries that come to the Home Buyers Office before, during and after an apartment purchase, for information on their rights and questions about what the law defines.
The department is available for inquiries via WhatsApp, e-mail and through the application form on the website.
The law includes limiting the linkage of apartment prices - Currently, many sellers link the price of the apartment, from the date of conclusion of the agreement to purchase it to the date of completion of payments, to the construction input index, even though a significant part of the apartment price consists of land and other components not actually affected by the construction input index.
The construction input index is subject to much larger fluctuations than other accepted indices in the market.
This creates uncertainty for homebuyers, who make decisions while taking a significant risk that the index will rise aggressively.
This also nullifies the ability of buyers to prepare for taking out mortgages and loans for the purpose of purchasing the apartment, since in practice the price of the apartment at the time of taking the mortgage may be significantly lower than the price actually paid.
In addition, in a world of rising construction input index, developers have created a negative incentive to deliver the apartment on time.
It is proposed to limit the linkage to the construction input index to the construction component only.
It is also proposed to stipulate that the linkage of payments will only be until the date of payment, in accordance with what is stated in the contract.
Regarding compensation for delay in delivery of an apartment - the law imposes the responsibility for payment of compensation for delay in delivery exclusively on the seller, but if the delay is due to circumstances beyond the seller's control he is not required to pay the compensation.
This mechanism creates an unbalanced balance of power, since the purchaser has limited ability to resist, and this too is manifested only in the possibility of lengthy legal proceedings.
The practice is such that the sellers of the apartments make extensive use of the exemption clause, even though claims concerning circumstances beyond the control of the seller are often rejected in the courts.
Therefore, the compensation clause is not optimally implemented in Israel.
This bill amends the exemption clause so that the seller will not be required to bear compensation for delay in delivery only in case of delay which was caused as a result of the buyer’s default.
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