Tama 38 - Is the End Nigh?


With the recent news that “Tama 38” as we know it is coming to an end in October 2022, and with this being such a popular investment theme for our clients in recent years, below we take a quick look at this decision and its ramifications.

For those of you who have been asleep the last few years (!), a quick recap.

Tama 38 was a plan approved in 2005 to provide a solution for the 100,000 or so buildings in Israel that had been built before 1980, when new construction laws were put in place to ensure that buildings could withstand earthquakes. As a project of this magnitude would cost the government a large fortune, they decided to offer financial incentives for the private sector to take on the burden instead. The builder strengthens the building’s foundations so that it can withstand an earthquake, redoes the façade, the lobby and stairwell and very often adds a safe room to each apartment. A new balcony may be added as well. All of these improvements increase the apartment’s value by as much as 20%, which is why they have been so popular with investors.

In return for the work, the builder receives building rights over and above the normal zoning allocation, usually building 1-2 additional floors with new apartments on the roof, which they sell at market prices.

In terms of the recent decision, the National Planning Administration has declared that the Tama 38 project in its present form will end on October 1, 2022, having extended the 2019 deadline by only three years instead of the expected five.

This does not mean that any Tama 38 construction needs to have been completed by then, rather contractors only have until this date to apply for a building permit. Projects will, therefore, continue to accompany us for many more years even after the deadline. It does means though that there is now time-sensitivity, meaning all parties need to get on with it so that the application can be made in time. When you consider all the stages that need to be passed before submitting the planning application, including getting two-thirds of the building’s residents to agree to go ahead, suddenly the time frame seems a lot closer.

Even still, say you didn’t manage to get the planning application submitted before October 2022, the National Council can decide at any point to make another decision on the matter. Furthermore, a local authority that decides it still wants to allow Tama 38 type projects after the deadline has passed, can still approve it under different by-laws.

So as far as property buyers are concerned, whilst Tama 38 as we know it looks to be ending, there is still time to invest in such a project. Although you might have to step on it somewhat!

Interested in buying a Tama 38, or other type of home in Israel?

Get in touch now and we will help you find what you are looking for, help you budget properly, get you financing if necessary, and connect you with the right professionals!

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