Gov´t passes Trajtenberg C´tee recommendations on housing, initiating plan to build 187,000 units in next 5 years.

The Cabinet unanimously passed an amended version of the Trajtenberg Report’s housing recommendations Sunday, which Prime Minister Binyamin Netanyahu said would increase the availability of apartments and lower prices.

This means the government has now approved all four chapters from the report – which it issued in response to last summer’s protests over the cost of living. The other three chapters dealt with taxation, competition and social services.

Subject to Knesset approval, the Israel Land Administration will market 187,000 new apartments throughout the country over the next five years. Sixty percent will be located in the high-demand areas of Tel Aviv, Jerusalem and central Israel - 40,000 of which will be for affordable housing.

“The more apartments there are, the greater will be the pressure to lower apartment prices,” Netanyahu said at the start of the weekly cabinet meeting. “This is what the Cabinet was dealing with even before this report was presented and adopted, and continues to do so after it.”

Opposition MKs including Nahman Shai (Kadima) slammed Netanyahu for removing earning power from the housing criteria in order to win coalition partner Israel Beitenu’s support. “Without this criterion, the government turns the Trajtenberg Report into a laughing stock,” Shai said.

Among the other reforms approved Sunday, maximum rental assistance for renters who are eligible for public housing will rise from NIS 1,750 to NIS 3,000 – at a cost to the state of NIS 800 million over five years.

The property tax (arnona) ceiling for apartments that stand empty for more than half a year will be doubled, with the aim of releasing more than 15,000 apartments into the housing market each year. Apartments deemed unfit for residence will be eligible for tax-exempt status for only nine months, after which double property tax will also be levied.

Levies of up to 10% of the price of the apartments will be imposed on contractors who win tenders but do not complete construction projects within two years of receipt of the building permit.

In addition, the government approved an NIS 1.5 billion housing package for new immigrants. The package includes monthly rental assistance of up to NIS 1,250 per family of new immigrants, monthly rental assistance of about NIS 3,000 for wheelchair-bound new immigrants, and increased housing assistance for elderly immigrants. New immigrant status will be recognized for 15 years from date of aliyah, an increase from the current 10 years.

The Association of Contractors and Builders criticized the reforms in a letter to ministers on Friday, claiming they would cause home prices to rise 10%. The association said the reforms would impose a heavy cost on developers who own land on which construction has not yet begun – in contrast to the goal of speeding up construction and reducing prices.

“We are dealing with a credit crunch in real estate and small businesses,” the letter said. “Levying a new tax will increase the number of loans that contractors must take to finance construction, worsening the credit crunch and resulting in a halt in housing starts.”

An amended version of the Trajtenberg Report’s chapter on taxation came into effect January 1, increasing the rate of income tax for high and middle-income earners, granting tax credits to father of small and children, and paving the way the eventual removal of small children.

The chapter on competition, passed in December, promised the establishment of a national public transport authority, and of committees to supervise the price basic products. The chapter on social services, passed in January, promised free education for children aged 3-4 and free after-hours daycare for children aged 3-9. (© 1995-2011, The Jerusalem Post 03/18/12)