Israeli Real Estate – Corona virus FAQ
Monday June 15, 2020
The COVID-19 pandemic has impacted businesses around the globe. In Israel, despite stringent lockdown measures, property management has been classified as an essential industry allowed to stay open, as the government understands that properties cannot be neglected.
We’ve had extensive discussions with our accountants, experts and attorneys, and are sharing some answers to the questions many of you are asking.
Q: If I have a mortgage on my apartment, is there any relief being made available during this period?
A: Yes, the Israeli government has directed all banks to offer mortgage holders 3 months of interest-free deferments on loan payments. You do not have to prove that you were hurt by the lockdowns to qualify. However, this is not automatic and one needs to request it.
Q: Will there be any property tax relief?
A: In Israel, property tax is paid by the tenant using the premises. The government is currently discussing whether to waive or lower tax payments for individuals who rent an apartment but most likely for an apartment, property tax will have to be paid. However, business owners are already entitled to 3 months of no tax if they face corona-related hardships. The interior ministry has also directed local municipalities to not aggressively collect tax, or punish and impose fines on those who are late on their payments.
Q: If I own or rented an apartment of my own, can I enter Israel from other countries?
A: Right now the regulations state that anyone entering the country has to be quarantined for 14 days in a government run facility. Shisha Realty and others are advocating that the interior ministry allow visitors to be isolated in their own apartment with mandatory police check-ins and testing. This is being done in preparation of the Yom Tov Shavuos, a time when many Yidden around the world have a long held minhag to visit Israel.
Q: How will the value of Israeli real estate be impacted by this pandemic?
A: Israel finds itself in a unique position as we’ve unfortunately been through a number of security-related slowdowns that have significantly lowered property values. This has led the government to implement policies related to mortgages and home buying that have B”H helped every slowdown be followed by a boom. There is little reason to assume that this time will be any different. Some experts even suggest that prices will go higher than before as people realize that Israel handled the outbreak better than other Western countries and showed how the lives of the elderly and sick are valued.
Q: If I want to take advantage of this opportunity and buy a home now, what should I be aware of?
A: Many attorneys writing contracts these days are adding a corona-related clause stipulating that buyers won’t lose their deposit if they are unable to close on time due to the many slowdowns experienced when applying for mortgages, title insurance etc. It is recommended that this stipulation be made as broad as possible in these unprecedented times.
Q: If I own a business or income-generating apartment, are there any disaster loans available to assist during this difficult time?
A: Yes, banks have been authorized to provide low-interest loans guaranteed by the government for struggling business owners. It is advisable to speak with an accountant about how to go about applying for these loans.
Q: If I own a vacation apartment sitting empty in Israel, what do I need to be concerned about?
A: Many apartment owners are generally satisfied with a family member or neighbor in Israel checking in on their apartment periodically. During this crisis, this is not sufficient. We’ve unfortunately heard of a few stories where squatters or those who need to be in isolation broke into empty apartments causing much damage. It is recommended that owners hire a professional company to look after their assets.
Q: Does Shisha Realty offer these management services now?
A: Yes. We are one of the premier management companies in the Holy Land and have extensive experience in this field. Due to climate and desert proximity Israeli homes need more maintenance, and we offer peace of mind in the form of our management services. We also handle utilities and other bills so that they don’t go unresponded. We’ve sadly seen stories of owners who were detained upon entry to the country because their bills were neglected and the interest accumulated.
Q: If I bought an apartment or condo under construction, what can I do to ensure that I receive the keys on time?
A: Generally, if a purchase isn’t ready within 60 days of when it was due, the seller or developer is required to pay 150% of the buyer’s monthly rent except if an act of G-d held up the project. It is advised that those who find themselves in such a situation should have someone pass by and take photos of where the construction is holding so that it can be established whether the lockdown was the cause of a delay in project completion. Most construction projects have NOT been impacted by the lockdown and should be on schedule.
Q: I want to cancel a purchase due to the coronavirus impacting my financial situation. Is that feasible?
A: Cancelling a deal is not a good idea as buyers stand to lose their deposit. From discussions with our attorneys it appears almost certain that courts will not accept the coronavirus impact as a valid excuse for backing out on a deal.
This FAQ is for informational purposes only. Please discuss your specific needs with your accountant or attorney.
May we soon see an end to this terrible pandemic and a refuah shleimah for all Cholei Yisroel.