Ramat Gan Enacts New Plan Allowing Large Betterment Levies on Old Apartments
About a year and a half after Israel largely abolished the practice of granting building permit relaxations, Ramat Gan municipality has introduced a new urban plan that effectively preserves some of the financial benefits previously linked to these relaxations. The "Anchoring Relaxations Plan," which took effect in January 2024, codifies the former policy of granting building rights relaxations in the city's older neighborhoods. This change means owners of older apartments seeking to sell may face betterment levies amounting to hundreds of thousands of shekels.
The relaxation mechanism, which allowed additions or changes to building rights beyond approved plans, was mostly canceled following legislation passed at the end of 2021. From January 1, 2025, no relaxations can be granted in permit requests, and construction must strictly follow approved plans. Previously, relaxations such as the "Shbas-Kahlon" allowed up to 30% additional housing units beyond the plan, and other relaxations affected building height and layout. The mechanism was abolished partly due to causing significant delays in permit processing, but it also served as a revenue source for local authorities through betterment levies.
Despite the cancellation, Ramat Gan's new plan reestablishes these rights within a statutory framework, enabling the municipality to levy betterment charges. For example, about a month ago, an owner in the Shikun Vatikin neighborhood was assessed a betterment levy of approximately 355,000 shekels, with around 152,000 shekels attributed to the new "Anchoring Relaxations Plan." The levy was based on additional rights never requested by the owner, including increased living area, higher floors, and basement additions.
This plan was approved shortly after the Supreme Court's "Leviathan" ruling, which aimed to reduce betterment levies on properties slated for urban renewal. The ruling became final in July 2023 after the court rejected Tel Aviv's request for reconsideration. Experts warn that other municipalities may adopt similar measures to maintain betterment levy revenues. Real estate appraiser Danny Treshansky noted these levies are often based on theoretical future building rights with uncertain realization, urging property owners to verify potential charges before selling.
Attorney Ariel Kamenkovich highlighted the broad implications, warning that municipalities embedding urban renewal rights in plans could impose levies on owners without any actual renewal projects underway. He expects further legal battles over levies on unrealized rights, arguing such charges do not reflect actual value and should not be imposed. Ramat Gan municipality responded that the plan aims to improve planning for permit applicants and that betterment levies are legally mandated upon property sales. The municipality denied claims that the plan was designed to compensate the city financially, stating other municipalities use similar approaches.
