A planned July 2 protest demanding lower housing costs in Tel Aviv has received more than 21,400 positive responses on social media, and that number is growing daily.
Organizers are demanding that the government step in to fix what they say is a broken system in which property and rental prices, along with the overall cost of living, have become prohibitively expensive. Frustrated residents have already taken to dwelling in tents in cities with the highest rents, in a move reminiscent of widespread protests in 2011 that also centered on spiraling housing prices.
Yad2, the most popular Israeli website for advertising apartment rentals, estimated that over the first quarter of 2022 rents rose on average by 10 percent year over year. But anecdotally, particularly in Tel Aviv, those renewing leases are frequently being asked to pay 30% to 40% more on apartments — and being forced to search for new accommodation at a few weeks’ notice if they cannot meet such steep increases.
The housing market, which is up 15.4% over the last year, makes headlines on a monthly basis. And while the government heavily markets its plans for subsidized home buying — such as the current Target Price program (Mehir Matara, successor to Mehir L’Mishtaken, the Price per Occupant program) — the rental market remains, as one renter puts it, like “the Wild West,” with relatively little attention given to the living situations of nearly a third of the population and rising.
The Times of Israel spoke with renters and landlords, all of whom asked to use pseudonyms for this article. With the market as it is, tenants feared being blacklisted and finding it even harder to secure accommodation, while landlords were concerned they wouldn’t find reliable renters.
“Liat” lives in a studio apartment in the Old North section of Tel Aviv. She pays NIS 5,250 ($1,521) a month plus local property taxes (which, according to Israeli law, fall on the renter) and utilities for 25 square meters (269 square feet) of living space. Her building is scheduled for a demolition program in the next couple of years and the landlord is looking to maximize profit in the meantime. As such, she says, her apartment is unrenovated and it is difficult to get the landlord to address issues that require spending money.
The landlord of another Tel Aviv resident, “Maya,” has cut her apartment in half to make two apartments out of one — with no reduction in the cost of Maya’s rent and no additional soundproofing. The division has doubled the landlord’s revenue to NIS 12,000 ($3,477) a month for what was previously a two-room apartment in a less-fashionable part of town. Maya now has just a few weeks to hunt for a new apartment in Tel Aviv, and has so far viewed a listing that is 16 square meters (172 square feet) with a monthly rent of NIS 4,000 ($1,160). She’s seriously considering leaving the city.
That’s something “David” has already decided on. After renting in Tel Aviv for seven years and constantly battling with landlords to perform repairs and refrain from raising the rent each year, David has given up and moved to Ashkelon, where he pays NIS 3,000 ($870) a month for an apartment close to the sea.
David is lucky that work doesn’t tie him to Tel Aviv, so he doesn’t face the commuting costs that have so far deterred “Itai” from leaving the city, despite the struggle to find affordable housing.
“I love Tel Aviv, I love the city, I love the cultural life,” Itai says. “I love that I can walk everywhere, that there are so many opportunities in terms of work and leisure. I don’t like it, but I am ready to pay another NIS 1,200 or 1,500 [$350 or $435] a month for those advantages.”
Itai used to live with a roommate in a two-bedroom measuring 65 square meters (700 square feet) in central Tel Aviv, where they stayed for four years. Rent increases were “only” around NIS 400 ($116) a year for each of them. Then he decided to compromise on location and moved to his current apartment in the bohemian southern Tel Aviv neighborhood of Florentin in 2020.
Itai was the first person to see the one-room apartment — 50 meters square (538 square feet) — and said he would take it right away. He works hard to keep the place in good condition, as he recognizes that he’s finally found a good landlady. She fixes problems right away, and the rent is NIS 4,000 ($1,160) plus NIS 280 ($80) for electricity.
Itai is 42, and does not believe he will ever be in a position to buy an apartment of his own. He’s seen his friends spend more than half their salary on rent in the city, or being forced to move every year or two, often shifting their children from school to school as they try to keep an affordable roof over their heads.
Although rental issues may be most acute in Tel Aviv, it is not the only place where prices are skyrocketing and the quality of property to rent at the lower end of the market is going down. “Deborah,” who owns a couple of investment properties in Afula, on behalf of her children, said that after the market rose by 30%, she felt compelled to raise rents to reflect that.
“I didn’t want to make things difficult for the tenants,” she says. “And they were good tenants. But these apartments are my children’s future, their chance eventually to get on the housing ladder, and I can’t afford not to move with the market.”
Everyone’s a landlord
On a Facebook page used by Israelis to vent their frustration at the rental market, there are reports of a two-bedroom apartment in Rishon Lezion with no living room and a landlord who still lives in the apartment with the tenants, which goes for NIS 6,800 ($1,970) a month; a studio in Modiin barely large enough to turn around in for NIS 2,450 ($710); and a three-room apartment in Kfar Saba (no children allowed) for NIS 5,150 ($1,492). Even a NIS 9,500 ($2,752) rental in one of Tel Aviv’s towers between the Namir and Ayalon highways offers just two bedrooms — one of which shares a window with an internal staircase.
And everyone’s a landlord these days: In 2003, fewer than 60,000 Israelis owned two or more homes, and they acquired the properties mostly through inheritance. Today, Tax Authority data says that number is 348,717, meaning 13% of the population can choose to rent out an apartment if they want to.
But rental returns in Israel are not especially high compared to other countries, said Daniel Goldstein, director of the Beauchamp Estates real estate agency in Tel Aviv. The average return in Tel Aviv last year was just 2.5%, while the capital value of properties rose by 22% to 28% between 2020 and 2021 for an average three-room apartment in Tel Aviv — from NIS 2.28 million ($659,845) to NIS 3.36 million ($972,404). It is a similar picture across the country.
Housing policy experts suggest that housing costs and utilities together should consume no more than 30% of a tenant’s gross income. In Israel, it is not unusual for people to spend 60% of their income on housing, according to Gil Gan Mor, head of the Social and Civil Rights Unit at the Association for Civil Rights in Israel — and then to struggle with their other costs.
But it’s not just the financial pressures that make the rental experience so difficult. Anat Levi, managing partner in the Jerusalem office of law firm Decker, Pex, Ofir & Co., says the majority of landlords download boilerplate rental contracts from the internet and then add extra clauses to give them leverage over the renters, who are given no choice in the matter.
While bad tenants do exist, says Gan Mor, the balance of power most often sits firmly with the landlord rather than the renter: Apartments are rented out in poor condition, landlords fail to perform basic repairs and maintenance, and lease contracts offer limited if any protection for the lessee in regards to contract extensions or rent hikes. This means that renters — who include some of the most vulnerable in Israeli society such as pensioners and young families — face constant uncertainty.
“Everyone has the right to live in dignity,” says Gan Mor. “This market doesn’t let that happen.”
Some false starts in addressing the issues
After the cost of living protests a decade ago, Tel Aviv Mayor Ron Huldai promised to address the issue. To date, the city has roughly 300 apartments earmarked as affordable housing. Another 10,000 are promised. But it is estimated that there are 250,000 renters in the city.
Last year, the government partially attempted to help fix the rental market by passing tax benefits intended to encourage long-term rentals. Some new housing developments are promising to designate a number of apartments for the long term, but the incentives were insufficient to attract large numbers of developers.
The Tel Aviv municipality has posted a sample “fair rent” contract on its website for renters to download and use. It is up to the landlords, however, to decide whether to accept those provisions or use another contract whose terms are in their favor.
A national fair rental law does exist — it is just rarely followed and rarely enforced, with many disputes only resolvable through prolonged and costly court cases that many tenants and landlords alike can’t afford.
But, attorney Levi says, a countrywide and properly enforced fair rental law would work better for both sides of the rental partnership. Such a law would, for example, up the notice period on the contract from one month to two or three, should either party wish to leave the agreement. It would also make clear which side is responsible for damage to the apartment, hold the landlord liable for anything that was not visible at the time of the rental start, and properly secure renters’ deposits — possibly by prohibiting the landlord from cashing the deposit check, spending the money, and then refusing to return it at the end of a lease. It would additionally make a provision for what happens if someone dies in the middle of a contract.
Taking it to the streets, again
Research suggests a large majority of the Israeli public believes that public protests are effective in influencing government policy. Organizers of Tel Aviv’s July rally are asking for legislation to help create immediate and sustainable changes in the housing market to make housing more affordable to rent and buy.
It is commonplace in business rental contracts to link rent increases to one of the consumer price indexes, providing a mechanism for rent to increase in line with the cost of living. “There is no reason this should not work for residential rental contracts,” says lawyer Levi.
And as property prices rise, the rental market will inevitably grow.
“The government needs to move away from focusing on home ownership, to understanding that it has a responsibility to provide everyone in the country with somewhere decent to live,” says the Association for Civil Rights in Israel’s Gan Mor.
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