Agencies' Tiff Could Make Cost of Homes Skyrocket

Israel's housing market just got more expensive, after the JNF canceled an agreement with the Israel Lands Administration.

Moshe Cohen,

Construction site
Construction site
Flash 90

Israel's housing market just got more expensive, after the directorate of the Jewish National Fund decided to cancel an agreement with the Israel Lands Administration for the development and marketing of JNF parcels by the ILA. Many of those parcels are located in areas of the country with high demand for housing – and with the cancellation of the long-standing arrangement, the ILA will not be able to offer those parcels for development.

Most of the land in Israel that is not in private hands is owned and administered by the ILA, with homeowners leasing the land that their homes are built on from the agency. One major exception to that rule are the large parcels belonging to the JNF, including many national parks and moshav communities.

As pressure has continued to grow for housing in the Tel Aviv and Jerusalem areas, the ILA has slowly been auctioning off its own holdings to developers, along with JNF holdings as they became available. As it turns out, however, most of the large development parcels in the center of the country are controlled by the JNF – and those parcels cannot be developed without government permits, which the JNF is now unlikely to get, government officials said. With the cancellation of the deal, the ILA cannot market JNF lands – and the JNF cannot develop them with any other body, basically freezing any new large-scale housing projects in the Tel Aviv area and much of the coastal strip.

The JNF's directorate claims that the ILA owes it a billion shekels in payment for the permits to market and sell parcels to developers. In addition, the JNF is protesting a demand that the organization “kick back” billion shekels to the government annually as payment for fees and taxes. According to the directorate, the demands – which are likely to be enacted into the state budget when the Arrangements Law is brought up for a vote in the Knesset next week – is a major violation of the agreement signed by the JNF and ILA in 1961 that has set the terms of the relationship between the two bodies for over five decades.

According to the JNF, the violation by the ILA means that the contract is abrogated – and thus they are ending the relationship right now.

Unless a new agreement is drawn up, said a Housing Ministry official, “there is going to be a major war over who is in charge of what when it comes to land development.”