Haifa Advances Property Tax Hike to Combat Abandoned Buildings
Haifa municipality loses 33.4 million shekels annually due to property tax exemptions granted to 564 abandoned buildings. Of these, only about 70 are undergoing revitalization through new plans or building permits, while 90 remain abandoned without any rehabilitation efforts. The remaining 404 are partially abandoned, with most lacking significant restoration progress. A May 2023 Knesset Research Center report estimates around 20,000 abandoned buildings nationwide, collectively exempt from property tax worth approximately 190 million shekels annually.
These figures were revealed ahead of a Finance Committee discussion on a legislative amendment aimed at drastically shortening the exemption period and enabling municipalities to collect property tax from owners of abandoned properties. Currently, under a British Mandate-era law, properties deemed unfit for use receive a full tax exemption for three years, followed by five years of minimal tax, and then permanent exemption if still unused.
The proposed amendment would limit the initial exemption to two years, after which owners must pay full tax rates for eight years, escalating to the maximum tax rate after ten years of vacancy. The goal is to financially incentivize owners to rehabilitate or sell these properties. Haifa Mayor Yona Yahav, who established a department dedicated to reviving abandoned buildings led by urban economist Vitali Dubov-Dotan, is a key proponent of this change.
Dubov-Dotan highlights that local authorities struggle with enforcement due to limited legal tools and that the current exemption encourages property abandonment. He contrasts this with international practices like in the UK, where property tax increases over time to discourage vacancy, sometimes reaching 400% of the standard rate.
The economic impact on Haifa is significant; for example, the abandoned Bat Galim central bus station, owned by Nitsba, has cost the city 5.7 million shekels annually in lost tax revenue since 2003. Nitsba is now advancing plans to convert the office building into a hotel and build approximately 1,800 apartments, which would generate substantial future tax income. Beyond lost revenue, abandoned buildings impose costs on the city for maintenance, policing, and legal actions, and half of local complaints report feelings of fear and neglect around these sites.
Mayor Yahav criticized the current law for creating a "distorted and unacceptable situation" that financially rewards neglect, forcing the public to pay twice through lost municipal income and diminished urban safety and development.
