Globes, Adv. Raz Livnat, 02.09.2020

It was recently reported that Ramat Gan is considering allowing the excessive use of offices in the stock exchange complex for residential buildings, for about ten years.

Seemingly, this is a welcome idea: the corona plague has caused and probably will cause many more office spaces to be vacated and the demand for offices to decrease, while the demand for housing is increasing every year due to the small number of residential construction starts. Allowing residence in office areas - where there are no educational institutions - can be a quick and immediate solution for populations absent from children and toddlers, such as adults or young people and singles.

It's as far as demand is concerned. As for the excess supply in offices, specifically in Ramat Gan, landlords in the stock exchange towers offered them for rent as offices for the payment of property taxes and management company fees only and without paying rent at all, only to reduce the damage of the owners who in the absence of tenants had to pay.

The city of Ramat Gan itself also has an interest in turning a considerable part of the office space, at least in the area of ​​the Diamond Exchange, into a residence. The presence of tenants will reduce the possibility of unwanted activity, some of which is illegal and concentrated during the hours of darkness. Lots of orphaned and dark office floors there in the evening.

The actual use determines

But this proposed solution has several problems, one problem is the property tax. In this regard, the mayor of Ramat Gan is apparently asking to eat the cake and leave it intact, and it is not certain that he will succeed.

The most important rule in the property tax classification is the actual use made of the property - therefore allowing residential use will not allow the imposition of a charge on a residential apartment at property tax rates for businesses, which are much higher. This means that Ramat Gan will lose money from such a move.

Each local authority has its own property tax order; There is no single order that applies to all the authorities in the State of Israel and therefore there are different methods of measurement and different definitions for the classification of charges. The mayor of Ramat Gan can contact the Minister of the Interior and ask him to receive balance payments; He can not change the classifications for property tax charges.

The Ramat Gan municipality was a pioneer in providing relatively low discounts and tariffs on office property taxes, so that businesses would abandon Tel Aviv, where property tax rates for offices are high, and cross the border into Ramat Gan. It must now be the pioneer of conversion from residential offices, but without imposing on the tenants an illegal decree that they will not be able to comply with.

Will not stand in court

Who would agree to rent an apartment when they know that the property tax they will be charged will be five times higher than the property tax in an alternative apartment in Ramat Gan? And that in addition to that he will also have to pay for parking that was in a residential building next to the apartment and on the stock exchange is approaching a cost of NIS 1,000 per month for one car? Carmel Shama HaCohen has the solutions.

Conditioning the solution in an illegal act of classifying the property tax charge according to a designation that existed in the past and not according to the current use - will not stand the test of the Appeal Committee for Municipal Property Matters nor the district court test.

The trend of combined use of business and residential is a correct and modern trend. However, the costs that office space owners will have to bear in order to make them residential (adding bathrooms, toilets and kitchens) and letting market forces do their thing must be taken into account. It is not clear who would be willing to invest the conversion costs from residential offices knowing that the permit would be limited to only ten years.

To allow the idea to membrane skin and tendons, the bridle must be loosened, not tied. Not ten years, no property tax bill for businesses.