יוזמת ההומסתייד - נחלה לישראל
frequently asked questions
ISRAEL HOMESTEAD INITIATIVE
1. Why is a homestead program in Israel desirable?
Israel is facing multiple challenges, with a cost of living crisis, increasing costs of housing, congestion of population along the coast between Ashdod and Haifa, and the need to absorb tens of thousands of potential immigrants from Western countries such as France. The Homestead Initiative can be part of the solution to these challenges. To read or download the full Israel Homestead Initiative proposal, click here.
2. Where is this land coming from?
93% of land in Israel—“Israeli Land”—is owned by the State with only about 7% under private ownership. According to Israel’s Basic Law on real estate, Israeli Land is jointly owned by the State (69%), the Development Authority (12%), and the Jewish National Fund (12%). Israel should open hundreds of thousands of acres to residential housing and business development in the north and south of Israel.
3. Why should we expect homes built in homestead regions to be less expensive than elsewhere in Israel?
Estimates are that at least 50% of the cost of building a home in Israel is tied to the land cost, compared with about 20% in the United States. If the cost of building a home can be reduced by at least 50% in homestead regions, together with accelerated permitting and timelines, this should provide an opportunity to build affordable housing for both Israelis and new immigrants in homestead regions.
4. Israel has absorbed hundreds of thousands of immigrants over its nearly 70 year history, including nearly a million Russians. Why establish a new program now?
Most immigrants from Israel's early years were refugees from the Holocaust in Europe or Arab countries. Many were placed in development towns in less than desirable conditions or hastily built apartments in cities. This is no longer an option because real estate in many development towns have become expensive (if these towns are now suburbs of larger cities), are undesirable for Western immigrants or these communities remain economically depressed. As for more recent immigrants from Russia, massive building of apartments occurred in established cities which has caused greater congestion and less room for future growth. A homestead program, in conjunction with economic enterprise zones, would encourage new immigrants and Israelis who do not already own residential real estate to locate in the north and south of Israel which has been an ongoing policy goal for successive Israeli governments.
5. What contributes to the dramatic increase in housing prices?
In addition to the demand of homes by wealthy immigrants in desirable regions, government control of land and regulations that add costs and prolong the time for the completion of building homes, experts explain that a restricted supply of housing units and historically low interest rates have led to skyrocketing prices. Regarding the constrained housing supply, Bank of Israel adviser Dr. Kobi Braude estimates that there exists a deficit of up to 40,000 housing units to meet the housing needs of the Jewish sector. Construction and Housing Minister Yoav Galant explained in October of 2015 that Israel would need to build a million new housing units within 20 years. Minister Galant estimates there is a 100,000 unit shortage. It is the supply issue which the Homestead Initiative intends to address.
6. Why is it important to establish a homestead program sooner than later?
The cost of housing in Israel continues to rise despite various governmental efforts, making it increasingly difficult if not impossible for many Israelis to afford to purchase a decent home. Additionally, multiple terrorist attacks in Europe by Islamic radicals are compelling many Jews in France and elsewhere to consider immigrating. Establishing the Homestead Initiative now will provide some if not limited relief to Israel's housing crisis, while also offering additional housing opportunities for new immigrants.
7. Would a homestead in the north or south of Israel really be enough to encourage Western immigrants or Israelis to move to those regions?
No. Homesteading must be implemented in conjunction with other efforts, such the establishment of economic enterprise zones. Additionally, the Israeli government must work to overcome difficulties white collar immigrants face in obtaining employment in Israel, easing the recognition of professional certifications, and decreasing taxation on companies wishing to relocate to Israel. In addition, Nefesh B'Nefesh should provide benefits to non-Anglo immigrants such as those from France. Otherwise, many of these highly educated and professional individuals may immigrate to other countries, such as Canada or the United States. This would be a great loss to Israel.
8. I don't get it. Homesteads worked in the United States because people lived off the land they were given, i.e., they turned it into farms and ranches. They didn’t have to worry about finding employment. Israelis do. Providing people land won’t work unless they already have jobs there.
This is why the Homestead Initiative requires the robust establishment of economic enterprise zones within the homestead regions. This will help encourage businesses to invest within these zones with job and corporate tax credits, income tax credits or VAT refunds. The program should be performance-based; meaning that without the promised jobs and investment, the business would not receive any of the benefits. Additionally, this proposal also includes the building of infrastructure as well (such as roads, utilities, high speed internet, civic centers, and parks), to be paid by general revenue, bonds and/or from leasing or sale of land to businesses to serve the new populations, with the desired outcome of developing communities throughout the north and south which will pay taxes, build new businesses, and contribute financially to the state into the future. Finally, initial homestead regions should be located within a 30 minute commuting distance from larger towns and cities in the region.
9. What are some of the conditions you envision for people to participate in the Homestead Initiative?
Homesteading will be open to Israelis who are serving in or have been honorably discharged from the Israel Defense Forces or National Service, and Diaspora Jews who are willing to make Aliyah to Israel, with a commitment to the terms of the Homestead Initiative. To be clear, an Israeli honorably discharged from the IDF will be eligible not only immediately after discharge from the military but for years thereafter so long as the individual meets the additional terms of participation. These terms include, but are not limited to, the following: a. Applicants are required to make a pilot trip to the region where they wish to homestead and obtain placement, education, and employment counseling prior to being accepted into the program; b. Applicants cannot already own residential real estate in Israel; c. Participants must remain current on their low interest loans and reside at least ten months out of each year at the Homestead residence, for a minimum of five years. After five years, the land would be transferred to the participant.
10. What happens if a participant moves before the end of five years?
The participant would lose any interest in the real estate and it would treated as if the participant paid rent for the time the participant resided at the homestead. Policies will need to be developed to address various circumstances where a family is compelled to move, a participant dies, or other unique situations.
11. How many homestead communities do you anticipate being established?
Since the Israeli government controls about 93% of the land in Israel, there should be many locations where to establish homestead communities in the north and south of Israel. However, in the first year of operation after planning the goal should be to establish from 3 to 6 communities of 400 units in both the north and south (2,400 to 4,800 units total). This would mean providing housing for a total of about 10,000 to 15,000 people in the first year. If successful, the Homestead Initiative could expand to greater numbers of communities in future years.
12. If Israel has a deficit of between 40,000 to 100,000 housing units, and needs to build a million new units within 20 years, a homestead program is only a drop in the bucket.
The Homestead Initiative is not a panacea to solve the entire housing crisis in Israel. It is one of a variety of reforms and programs which should be implemented in Israel. If successful, over a period of years it is conceivable that the Homestead Initiative could encourage hundreds of thousands of Israelis and new immigrants to establish thousands of homes in the north and south of Israel.
13. Wouldn't establishing homestead communities have a negative financial impact on nearby towns?
The Homestead Initiative should be implemented with a goal of not harming private building in areas near homestead regions or to artificially depress the housing market of non-homestead areas. The five year commitment required of homestead participants should limit any negative impact on housing values of neighboring communities.
14. There's already the Mechir Lamishtaken program that helps first time apartment buyers with preferential terms by offering large financial benefits to those meeting eligibility requirements to buy a new apartment from a contractor at less than the market price. How does the Homestead Initiative differ?
In Mechir Lamishtaken tenders, developers compete for the lowest price per square meter for an apartment built in accordance with strict specifications determined by the Ministry of Construction and Housing. Developers receive a discount on the price of land, and the program applies to high density housing. In contrast, the Homestead Initiative aims to establish entirely new communities in sparsely populated regions of the north and south by encouraging development through economic enterprise zones, accelerated permitting and providing land grants to participants after five years. Homestead participants would have more flexibility in the building of their homes than under the Mechir Lamishtaken program, and would not be restricted to high density housing.
Similar to the Homestead Initiative, an eligible individual who purchases an apartment in the Mechir Lamishtaken program is prohibited from selling the apartment to a third party for a period of five years.
15. Aren't there powerful economic interests in Israel and governmental barriers that will oppose or undermine the Homestead Initiative?
This is certainly possible, and it will take an effort from many people to make this program a reality. However, Israel is facing major economic crises with an increasing cost of living and housing costs outstripping income increases. These are significant incentives for politicians from all political backgrounds, builders and labor to consider creative policies to alleviate these economic pressures.
16. What practical barriers might there be to the Homestead Initiative?
The recent report issued by the Technion indicates that the building industry’s capacity and productivity needs to be increased by applying advanced management and technological methods. Companies with the management and engineering capabilities should be allowed to increase productivity to build 1,000 to 2,000 units and be responsible for everything from planning, to infrastructure to construction.
17. What political parties or movements are likely to support the Homestead Initiative?
Ideally, the Homestead Initiative will be supported by a major coalition of political parties and movements from across the spectrum. For Likud and its allies on the Right, the Homestead Initiative will help relieve some pressure on the housing market and provide young Israelis and Western immigrants with an opportunity to obtain affordable housing and employment within cohesive communities. For the Zionist Union (Labor) and its allies on the Left, the Homestead Initiative will provide young Israelis with opportunities to obtain affordable housing outside of Judea and Samaria, the later which causes much friction with the United States and the international community. For the Kulanu Party, which campaigned in 2015 to break apart the Israel Lands Administration, this proposal could serve as one of several strategies to help reform land and construction policies as well as to provide affordable housing for Israeli families.
18. Are there potential non-governmental organization (NGO) partners to collaborate with the Israel Homestead Initiative to help it achieve success?
Certainly. Since 1999, the OR Movement (https://or1.org.il/english/home/) has been working to establish communities in both the Negev and Galilee. In 1999 it established a community called Sansana in the Negev, and since then 32,000 individuals live in new and renewed communities in the Negev and Galilee. But with revenue and expenses under $5,000,000 in 2015, this organization's impact is limited. The Homestead Initiative, with its development incentives through economic enterprise zones, accelerated permitting processes, and investment in infrastructure, would highly compliment the OR Movement and its goals, and could be a major catalyst toward creating full economic and social self-sustainability in the Negev and Galilee.
19. Isn't there a lot of work to do before any homesteads are established or built?
Absolutely. First, of course, the Homestead Initiative needs to be adopted by the Knesset and implemented by various regulatory authorities. Regulations and rules need to be drafted. Urban planners, architects, engineers, economists, land use attorneys, construction companies, developers, regulators, among others, must be engaged to implement the Homestead Initiative. Significant cooperation and coordination would need to be achieved between governmental ministries and agencies such as the Ministries of Finance, Construction and Housing, Aliyah and Integration, Interior, and agencies such as Nefesh B'Nefesh and the Jewish Agency, among others. While it won't happen overnight, we know that Israel is an incubator of great concepts and ideas. When there is a will to accomplish an important national goal, such as the desalinization of ocean water, Israel can achieve great success.
20, I'm convinced. This sounds like a promising idea. How can I help?
First, thank you for making the effort to read through these FAQs and become familiar with the Homestead Initiative. You can help by providing your constructive comments, suggestions and/or corrections to improve the Homestead Initiative concept by sending an email to steve@israelhomestead.org. Additionally, please share this website and the Israel Homestead Initiative with your friends and colleagues via social media and email. Finally, if you know of policy makers within Israel who would welcome this concept or want to obtain additional information, please share this information with these individuals and offer to make an introduction on behalf of this effort.