The Builders of the Land Contractors Association presented today (Wednesday) a plan in which the government, contractors and municipalities will each contribute their share to freeze apartment prices and bureaucracy.
The goal: 100,000 new apartments a year that will close the shortage of apartments within 5 years and stop the price frenzy.
The industry will commit to reaching construction starts of 120,000 housing units per year.
The contractors will undertake to sell apartments to those entitled to the Ministry of Construction and Housing at 2019 prices, in addition to linking the components of the construction input index, without the cost of land.
Contractors Conference in Eilat // Photo: Ran Shauli
This obligation is subject according to the contractors to the understanding that there will be no urban renewal and combination transactions and is subject to legislation on the subject that will regulate the non-competition in the field.
The contractors will also undertake to shorten the construction execution times, subject to the charging of bodies approving the building permits and the population to meet a fixed time frame.
The "package deal" offered by the Builders of the Land Contractors Association also includes a commitment by the local government to approve the local authorities' obligation to approve self-licensing for all types of buildings. The same incentive of NIS 50,000 per apartment. In fact, the municipalities will have to immediately release 180,000 housing units that are currently in the process of being licensed for a permit.
A press conference that opened the annual contractors 'association conference in Eilat, President of the Builders' Association of Builders Association and chairman of the Foundation for the Encouragement and Opening of the Construction Industry, Raul Srugo, said: " .
The way to resolve the crisis is by increasing supply and stopping land price increases.
The historic agreement we propose will make it possible to eliminate this crisis within a few years.
I call on partners in the government, the Knesset and local government, put aside their egos and help us prevent an economic catastrophe in the coming years. "
Under the association's proposal, the government will commit to the immediate marketing (by the end of 2022) of the land planned in the Israel Land Authority's inventory of 300,000 housing units with a target for completing land sale transactions for the construction of 100,000 housing units each year, in 2023-2025.
It will also have to carry out planning of three new metropolitan areas and incentivize tax benefits (TAX CREDIT) for contractors who will build urban renewal in the periphery.
The proposal includes a government decision to freeze the country’s land prices on the values of 2019. In addition, the government will have to sell the land and impose development levies on developers and contractors in a 3-year payment schedule.
In this context, the association requires the government to approve the implementation of "self-licensing", ie, the issuance of a building permit by a private architect for all types of residential construction, in order to shorten the construction by an average of two years.
Contractors will also be required to make the design of buildings “volumetric” with freedom in interior design of the building and division into apartments.
According to the plan, the government will allocate NIS 5 billion a year to local authorities for the benefit of residential support infrastructure, in accordance with the authorities' compliance with the building permit approval targets.
The subsidy will be in the amount of NIS 50,000 per housing unit.
This is a total of only about 5% of the return on investment expected from government revenue from the industry, which will reach NIS 100 billion a year, in light of the expected jump in construction volumes.
At the same time, the government will have to budget for increasing manpower standards and increasing salaries for licensing teams in local authorities.
The deal will include the government's commitment to link all of the state's performance and infrastructure contracts from 2020 to the various input indices by field of construction.
The association demands that the package also include a safety net of a promise to purchase apartments by the government if there are any that will not be sold - in order to transfer them to public housing and housing for long-term rent.
In addition, the association demands a promise in the legislation of the continuity of conditions even when a government is changed.
The contractors believe that in order to create the conditions for the success of the program, the government must increase the number of foreign and Palestinian workers in the industry, in accordance with the model set by the Technion.
The contractors also demand that the government increase investment in infrastructure to a level acceptable in OECD countries with an additional NIS 40 billion per year and increase private activity using the PPP method, and that the government prevent new regulatory measures in the field of construction by 2025.
The association says that complementary measures required for the success of the deal in the economy will be the approval of Shaked's alternative to NAP 38 until the end of the current Knesset session or, alternatively, the extension of NAP 38 until the end of 2025 by the National Planning and Construction Council. .
The association's CEO, Amnon Merhav, noted that last year, the state's revenues from the sale of land, taxes and levies reached an all-time high of NIS 74 billion.
The rental market is also suffering from shortages.
In the first quarter of 2022 we see 4-6 percent increases in rents in all sought-after cities.
On the change in the "Sale Law," Merhav said: "The government wants to oblige contractors to pay fines for late delivery of an apartment beyond their control.
But the time for obtaining a building permit in the main cities is already between 26 months and 50 months.
Construction time itself continues to skyrocket due to the fact that the state itself fails to produce the additional workers it itself has determined should be produced here, and if that is not enough, then in the last five years IEC, firefighting and municipal licensing procedures have added an average of 5.6 months. Of an apartment until it is handed over. "
Haim Feiglin, Vice President of the Association and Chairman of the Entrepreneurship and Construction Division, commented on the recent days of senior government officials who argued that there is no shortage of apartments in Israel. Less than land marketing statements.
In the field - the gap between the addition of households and the completion of construction continues to grow and in recent years it has advocated about 10,000 apartments a year.
Households find different solutions but the constant pressure remains.
Factually, the cumulative gap over the past two decades, according to data from the state itself, is similar to the cumulative volume of enrollment in a price-per-tenant program.
We are talking about a shortage of more than 190,000 apartments now. "Feiglin also noted that there was a slowdown in the delivery of apartments during the Corona period in light of bureaucratic difficulties created by the plague.
BDI: Over 600 contractors ceased operations
The conference in Eilat revealed data from the business information company cofaceBDI, according to which a record of years has been recorded since the beginning of the year in the number of construction companies deducted from the number of active contractors in Israel.
These are over 600 construction companies.
The business information company expects that in 2023 another record will be set in this field and the volume of contracting companies that will be deducted from the contractors' register will increase to about 680.
"Every month, more than 60 contractors run into difficulties. This is tens of percent higher than the previous year," says cofaceBDI CEO Eyal Yanai. 4.2% Yanai joins the Builders 'Association of Builders' estimates that at the heart of the crisis in the industry is the rise in raw material prices and construction costs, and he presented a survey among hundreds of construction companies, of which 97% expect the housing prices to continue, Construction costs on a decline in housing supply.
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