It is safe to generalize that apartments in Israel are small and expensive. However, some landlords have tried to increase their rental income on apartments, by taking an already small apartment of say 3.5 rooms and transforming it into 4 separate “studios.” This is what one Tel Aviv owner did, without obtaining the requisite building permit.
There is no doubt that the legal route to creating additional units of your desirable Tel Aviv real estate is expensive and time consuming. You need an architect and a lawyer to draw up the plans and submit them to the Municipality. The neighbors have to agree to this change in use, which usually means paying them a fee for their consent. And the biggest expense: the apartment will be more valuable as separate units and there will be “improvement levy” (heital hashbacha”) to pay. These expenses are on top of the actual renovation costs.
Sometimes saving the expense of going the legal route can go very wrong. One of the sanctions, which the Regional Zoning Board can impose on such an owner is to order the Israeli Electric company to cut off electricity to the apartment, according to Section 157 (a) (6) of the Law of Zoning and Building, 1965.
A recent decision by a District Appeals Committee (Appeal – TA 5462/11), upholding the Regional Zoning Board’s decision to cut off electricity to one such apartment, gives a warning message to all those apartment owners trying to increase their rate of return, on the sly. In this case, the owner was undeterred by the fact that the she had 4 distinct tenants in four small studios. She maintained that her property was still a 3.5 roomed “apartment,” and that she didn’t need a building permit to transform the living space into four separate studios. The Regional Zoning Board didn’t agree and in June, a District Appeals Committee upheld their decision to cut off electricity to that apartment, because the separation into “studios” was done without a building permit.
Tenants looking to rent in Tel Aviv need to pay attention to the terms of their lease agreement and what their rights and obligations are if they find themselves without electricity, while the owner is embroiled in a legal battle with the Municipality. One thing a potential tenant can do, before signing a lease agreement, is to check whether a building permit was issued, when it appears that the leased space has been divided. Of course, with space in Tel Aviv at such a premium that even absurdly small spaces of 15 meters are in demand, many tenants seem willing to take their chances…