Israel’s real estate market has been on a steady rise in recent years, making it an attractive investment for both domestic and foreign buyers. If you’re considering buying an apartment in Israel, here is a comprehensive guide to help you through the process.
1. Do your research. Before you start shopping for apartments, it’s important to do your research and understand the Israeli real estate market. This includes understanding the different types of apartments available, the average prices in different cities & neighborhoods, and the factors that can affect the value of an apartment – especially the way the apartment is registered in the various registrars. For example, an apartment that is not fully registered in the official land registrar may require additional expenses to buy, and in turn, harder to sell in the future.
As for prices, for example, an apartment in Tel-Aviv will cost significantly more than an apartment in Haifa or the small suburbs surrounding Haifa. It will also (depending on the apartment) may be harder to rent long-term if you intend to rent the apartment to others. Another factor to take into account if you intend to live in the apartment, is the cost of living and surrounding services, whether it’s worthwhile owning a car in that city. There are are also, sadly, some security risks to consider – the main one is whether one of the rooms in the apartment can be used as a bomb shelter (called “MAMAD” in Hebrew which is an acronym for “protected space” in the apartment). Most “newer” apartments were built with a MAMAD, but some do not have a MAMAD, however after October 7th we expect to see MAMADs added. Finally, a balcony or a backyard became very important aspect after COVID-19 and we expect apartments that have a balcony or a backyard (even a very small one) to be in higher demand.
2. Hire a lawyer. According to Israeli contract law negotiating and making an offer may result in a binding contract even if not all details were decided on. To avoid that – have a lawyer review the apartment’s registration documents and other information that can be attained relatively easily and quickly from government and municipal agencies. DO NOT SIGN any document – the document’s headline does not matter. Some real estate agents unlawfully had buyers and seller sign contracts that were binding, which resulted in a legal obligation to report the contract to the tax authorities and in turn made cancelling these contracts complicated and expensive. Tax is also a factor to consider. Israeli land tax laws impose a tax on purchasing an apartment and also on the profit made when selling an apartment. There are ways to get a tax exemption and other legal ways to reduce the tax, but they require planning in advance.
Do you have to physically come to Israel and sign the contract? No!
Although its preferable to be present in Israel to see the apartment with your own eyer and personally sign the contract and all other documents required to have to apparent registered in your name – It’s not a must. We can help your purchase an apartment in Israel using a Power of Attorney that you’ll sign in the Israeli embassy / consulate closest to you. After the contract is signed you will be required to go to the Israeli embassy again to sign additional document required to report the contract to the tax authorities and to have the apartment registered in your name.
3. Be prepared to negotiate. The asking price is just that – an asking price. You should be prepared to negotiate the price to get the best deal.
4. Make an offer. Once you’ve found an apartment that you like, you’ll need to make an offer. The offer should include the purchase price, the closing date, and any contingencies. You may also want to consider having a home inspection done before you make an offer.
Aviv Gelman Law Office was established in 2017. Located in Haifa we handle real estate deals throughout Israel some of which are made as court-appointed trustee.