After the cancellation of exemptions: a new plan in Ramat Gan will lead to betterment levies of hundreds of thousands of shekels

About a year and a half after the institution of exemptions in licensing procedures was almost completely abolished, it turns out that the Ramat Gan municipality has found a way to preserve some of its consequences — and primarily the collection of betterment levies that for years accompanied the approval of exemptions.

In January of this year, a new master plan called the "Exemption Anchoring Plan" came into effect, within which the policy of exemptions that was previously practiced, according to the municipality, was anchored in all the old neighborhoods of the city. For owners of old apartments seeking to sell their properties, this may mean a charge of hundreds of thousands of shekels in betterment levy.

As recalled, the institution of exemptions, which for years was part of the building permit issuance process, was almost completely abolished following the law approved at the end of 2021. Starting January 1, 2025, it is no longer possible to receive an exemption as part of a permit application, and construction is possible only in accordance with the provisions of an approved plan, without additions or changes.

An exemption is an addition or change in building rights that are not anchored in the valid plan. Among the most well-known exemptions was the "Sheves-Kahlon" exemption, which allowed for an addition of up to 30% of housing units beyond what was approved in the plan. The cancellation of the mechanism was due to the conclusion that it contributed to significant delays in licensing procedures, as every request for an exemption required an objection procedure. Alongside this, the exemptions also served as a source of income for local authorities through betterment levies. With their cancellation, this source of income was supposed to shrink, but in Ramat Gan, a new plan came into effect that establishes those same rights within a statutory plan.

Thus, about a month ago, an owner of an old apartment in the Shikun Vatikim neighborhood received a betterment levy assessment of about 355,000 shekels. From the assessment, which reached the "Nadlan Center", it appears that about 152,000 shekels of the charge were attributed to plan RG/MAK/340/G/100 — the "Exemption Anchoring Plan". According to the explanatory notes, its purpose is to set construction provisions for housing in accordance with the exemption policy that was practiced in the local committee. The assessment attributes to the apartment owner additional rights that were never requested by him as part of a permit application, including increasing the living area, changing the height of floors, and adding basement floors.

The Ramat Gan municipality's plan came into effect about three months after the Supreme Court's "Levitan" ruling, which was intended to reduce the scope of betterment levies imposed on apartment owners in buildings designated for urban renewal. In July, the ruling became final after the court rejected the Tel Aviv municipality's request to hold an additional hearing. Following these developments, concern is growing among parties in the field that other local authorities will adopt similar moves.

According to real estate appraiser Dani Trashensky from the Kamil-Trashensky-Rafael firm: "Similar to the quarters plan in Tel Aviv, here too it is a theoretical betterment based on future building rights and vague planning exemptions, which there is no certainty if and when they will be realized. In my estimation, we will see more and more local authorities issuing demands for payment of betterment levies in large amounts based on plans of this type."

Attorney Ariel Kamenkovitz, from the Kamenkovitz-Zalmanovitz firm, which specializes in planning and construction law, also believes that this is a move with broad implications: "Any city that chooses to anchor rights for urban renewal within a municipal plan may create a situation where owners of old apartments will be charged a betterment levy, even though no building permit application was submitted." Kamenkovitz further added that a levy charge for rights that exist only on paper and are not actually priced in sales transactions does not reflect a "true tax," and therefore there is no place to impose it.

Ramat Gan Municipality Response:

"The attempt to present the exemption plan created for the benefit and welfare of the public as a plan whose purpose is to compensate the municipality is detached and delusional. The municipality collects a betterment levy in accordance with the provisions of the law, and a 'sale' is a realization for which the municipality is obligated to collect the levy. The approved plan is a plan that replaced the procedure of publishing exemptions in permit applications and its purpose is to improve planning for permit applicants. As mentioned, the municipality is obligated to collect the betterment levy and is not permitted to exempt from this payment. This is not an exceptional move, as other authorities have acted in exactly the same way."