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Absentee Owner Tax Could Slash Jerusalem Rent Prices

In order to encourage absentee owners to rent out their Jerusalem homes to young couples, the city will slap them with a huge arnona bill.
By David Lev
First Publish: 11/10/2011, 2:51 PM

Jerusalem Aerial View
Jerusalem Aerial View
Flash 90

One reason for high housing prices in Jerusalem, say economists, is the demand caused by the fact that so many homes are bought up by wealthy Jews from abroad, who use the apartments just a few weeks a year, when they visit for holidays or for the summer.  The high prices for purchasing and renting and the severe lack of rental apartments keep young families from settling in the city.

In order to encourage owners of these apartments to rent them out to young couples or students during the “off-season,” the municipality has decided to impose a special “non-occupancy tax” - a  doubling of the city real estate tax (arnona) that would apply to apartments and homes that are unlived in for most of the year.

The idea of implementing a tax as a vehicle to encourage landlords to rent out their apartments came from the Trachtenberg Committee on the high cost of living, which met over the summer.

According to municipality statistics, there are some 5,000 empty apartments in Jerusalem. Some popular neighborhoods have been described by Jerusalem mayor Nir Barkat as “ghost towns” at certain times of the year, when almost all their owners are to be found at their residences abroad.

Anyone living in one of those Jerusalem buildings all year round knows how strange it is to be almost the only living resident in a building with several storeys.

Barkat said that something had to be done to encourage these landlords to rent their homes out to young couples and students, whom he called “the city's oxygen supply. Adding thousands of these 'ghost apartments' to the market will dramatically increase the availability of rentals in the city and drive rents down,” Barkat said.

Jerusalem has actually been preparing for the possibility of imposing some sort of penalty on absentee homeowners for a while; two years ago, municipal inspectors began gathering data about empty apartments, identifying their locations and tracking down their owners.

Mayor Barkat has written to most of them, asking them to do their civic duty and rent their apartments out while they are out of the country. A committee, whose job is to convince owners and track down appropriate renters, was established as well. The program has had limited success, city officials admitted.

The city in recent days appointed a group to determine specific criteria for deciding which apartments would be slapped with the absentee owner tax. Once the city council approves the increase, it will be referred to the appropriate government agencies and ministries for their approval – at which point, the bills will begin to go out, hopefully encouraging owners to rent out their homes.