On Monday evening, Housing Minister Haim Katz circulated a draft government resolution setting a goal of adding 40,000 apartments to the long-term rental market by 2030—half of them from the private sector. The proposal also calls for mandatory reporting of rental income and the establishment of a professional unit within the Housing Ministry to oversee rental market policy.

By Nimrod Buso, Nadlan Center

The Ministry of Construction and Housing sent a draft government resolution to other government offices on Monday night, aiming to accelerate the development of Israel’s long-term rental market, with a strong emphasis on involving private apartment owners. The draft is based on recent internal work by the ministry. It sets a target of adding 40,000 long-term rental units to the market by 2030—half through institutional channels and half through the private sector. To encourage private landlords to participate by offering their apartments for long-term rental, the resolution proposes a series of tax incentives.

The resolution is based on a document titled “Strategic Plan for the Rental Market,” which was developed through internal ministry efforts that included extensive data research and an international comparative study.

The proposal calls for the establishment of a professional unit within the Ministry of Construction and Housing to oversee rental market policy in Israel. This unit would be responsible for consolidating information about Israel’s rental market, analyzing existing data, and shaping government policy in the field. According to the resolution, the creation of this team would require adding four new staff positions to the ministry—including one senior-level role—and a budget increase of 30 million shekels.

The resolution also proposes forming a team headed by the Director General of the Planning Administration and the Director General of the Housing Ministry. Its members would include the Director General of the Interior Ministry, the Accountant General, the Budget Director, the head of the Israel Land Authority, and the Chair of the National Planning Headquarters—or representatives appointed by them. “The team will focus on developing a variety of housing solutions that are tailored through planning to the needs of households living in rental housing. It will consult with local government representatives and other relevant bodies,” the proposal states.

Among the solutions the team is expected to explore are expanding the use of surplus “brownfield” sites for rental projects, evaluating the feasibility of statutory planning for rental housing, assessing the need to allocate dedicated land for rentals in planning frameworks, and developing purpose-built rental solutions such as co-housing, rental complexes, and small apartments.

The proposal also tasks the Minister of Finance with monitoring the progress of legislation requiring landlords to report rental income to the Tax Authority—even if that income falls below the tax-exempt threshold. It’s worth noting that the main barrier to advancing this legislation so far has been the Knesset Finance Committee, chaired by MK Moshe Gafni. The primary aim of this move is to allow the government to collect data and gain insight into the rental market. In addition, the Tax Authority estimates that mandatory reporting could bring in roughly 2 billion shekels per year from landlords who currently underreport income but may reconsider once the reporting requirement is enforced.

The resolution also calls on the Housing Minister to implement several steps intended to improve the success rate of institutional rental tenders. These include easing conditions in tenders issued by the Israel Land Authority, reviewing the possibility of standardizing regulations across the institutional rental sector, and expanding the operations of the government-owned company Dira Le’Haskir.

A 46 Billion Shekel Annual Market

According to the Housing Ministry, the share of households living in rental housing in Israel has steadily increased over the years. As of 2024, it’s estimated that about 29% of all households in the country are renters. The overall rental market is valued at roughly 46 billion shekels per year.

In a statement, the Housing Ministry said: “The draft resolution was developed following extensive internal work by Director General Yehuda Morgenstern in coordination with the Finance Ministry, Interior Ministry, Israel Land Authority, and Planning Administration, alongside discussions with representatives from the financial and development sectors.”

Housing Minister Haim Katz said: “A home is a basic need, and the State of Israel has a duty to ensure decent housing for all its citizens—especially young couples. The initiatives taken so far haven’t provided a sufficient solution. This resolution is meant to foster inter-ministerial cooperation for practical solutions that can bring real relief to the people of Israel.”

Director General of the Housing Ministry, Yehuda Morgenstern, stated: “Following extensive internal work, dozens of meetings, and discussions with all relevant parties, we’ve drafted a comprehensive proposal that will, for the first time, allow the rental market in Israel to be managed in a holistic and coordinated way. This step—alongside strengthening the Dira Le’Haskir company—will support data-driven decision-making and lead to significant improvements in long-term rental availability and housing affordability for Israeli citizens.”