What Are the Main Criteria for a Neighborhood's Eligibility for a Pinui Binui Project?
For a complex to be eligible for a Pinui Binui project, it must meet several strict legal and economic criteria. First, the complex must include at least 24 built housing units, to ensure economic viability for the developer and significant public benefit.
Additionally, consent from at least two-thirds (66%) of apartment owners in the complex is required. The 2021 legislative amendment reduced the requirement from 80% to 66%, significantly easing project advancement. In small buildings with 4-5 apartments, consent from at least 3 apartment owners is required.
Another criterion is the condition of the buildings themselves. Buildings designated for Pinui Binui are typically structures built between the 1950s and 1970s, with only 3-4 floors, and do not meet modern safety standards or earthquake resistance requirements. In some cases, buildings declared 'dangerous' or at risk of collapse receive priority.
The state must officially declare the complex as designated for Pinui Binui. This follows assessment of the complex's planning, economic, and physical feasibility, including examination of ground conditions, population density, and economic viability for the developer.
- Main eligibility criteria:
- • Complex of at least 24 housing units
- • Consent from 66% of apartment owners
- • Old buildings that do not meet safety standards
- • Planning feasibility - ability to increase building rights in the area
- • Official state declaration of the complex
- • Economic viability for the developer (minimum profit of 16-17%)
How Do Local Authority Policies Affect Project Success?
Local authority policies in different cities critically influence the frequency and success of Pinui Binui projects. One of the most significant tools in authorities' hands is setting the betterment levy rate, ranging from 0% to 50%.
Cities like Kiryat Ono and Ashkelon set a 0% betterment levy rate across the entire city, making projects particularly attractive to developers. In contrast, Tel Aviv charges a 50% betterment levy in most areas (except Jaffa D and Kiryat Shalom), significantly increasing project costs.
Ramat Gan, Givatayim, and Kiryat Ono excel as cities with many approved projects, thanks to supportive authority policies and economic incentives. Givatayim, for example, provides municipal tax (Arnona) discounts on the replacement apartment for 5 years in a graduated rate: 100% in the first two years, 75% in the third year, 50% in the fourth year, and 25% in the fifth year.
Yehud-Monosson, Ganei Tikva, and Ramat Gan also lead in the number of approved housing units relative to population. These authorities operate in the local authority track, where the municipality initiates the project in areas where private developers lack interest, typically in disadvantaged neighborhoods requiring public intervention.
- Betterment levies by selected cities:
- • Kiryat Ono: 0% citywide
- • Ashkelon: 0% citywide
- • Bnei Brak: 25% citywide
- • Yehud-Monosson: 25% citywide
- • Tel Aviv: 50% in most areas, 0% in Jaffa D and Kiryat Shalom
- • Petah Tikva: 0% near metro stations and Ramat Verber, 50% elsewhere
- • Rishon LeZion: 25% in Ramat Eliyahu, 50% in other areas
What Are the Main Motivations for Residents to Join a Project?
The most central reason for residents joining a Pinui Binui project is receiving a significantly new and upgraded apartment without paying taxes. New apartments typically include a Mamad (protected room), elevator, private parking, storage, balconies, and high specifications.
Another major economic advantage is complete exemption from capital gains tax, purchase tax, and betterment levy - all these taxes are paid by the developer. This represents savings of tens and even hundreds of thousands of shekels for the resident. Additionally, property values increase by an average of 40-70% upon project completion, so an apartment purchased for 2 million NIS can reach a value of 2.8-3.4 million NIS.
Another important consideration is safety and security. New buildings are built to full earthquake resistance according to Israeli Standard 413, include a Mamad in every apartment, and meet all modern safety standards. This is a particularly central consideration for families with young children or elderly people concerned about earthquakes.
Improved quality of life is another significant motivation. Residents enjoy renewed infrastructure, parks and green spaces, new public institutions, bike paths, access to public transportation, and overall upgrading of the urban environment. Additionally, they receive full funding for alternative housing or rent throughout the construction period.
- Main advantages for residents:
- • New upgraded apartment with Mamad, elevator, and parking
- • Complete exemption from capital gains, purchase, and betterment taxes
- • Average property value increase of 40-70%
- • Full funding for alternative housing or rent
- • Safety - full earthquake resistance
- • Improved quality of life and urban environment
- • Special options for seniors aged 70+
- • Bank guarantee from developer ensuring project completion
Recent Legislative Changes and Their Impact on the Process
In recent years, several significant legislative changes have accelerated Pinui Binui processes in Israel. In 2021, the required consent percentage was reduced from 80% to 66%, a change that significantly eased project advancement and prevented individual residents from blocking entire projects.
Amendments 6 and 7 to the law from 2018 and 2021 lowered the eligibility age for special benefits for the elderly from 75 to 70. Seniors aged 70 can now choose alternatives such as moving to assisted living, receiving two smaller apartments, or receiving an apartment in another area. Seniors aged 75 and above can choose to receive financial compensation instead of a new apartment.
In 2023, the Economic Arrangements Law expanded the capital gains tax exemption to owners of two apartments in the complex (previously applied only to owners of one apartment), increasing participation incentives. Additionally, TAMA 38 tax benefits were extended until 2033, although new TAMA plans expired in most cities in August 2025.
An important March 2025 innovation establishes the right to cancel contracts with a fixed payment: if a project does not advance, residents can cancel the agreement with a payment of 5,000-10,000 NIS per unit in Pinui Binui. Additionally, the 2024 Competition Law allows the Government Authority to intervene between competing developers, and if no agreement is reached within 6 months, owners can cancel existing contracts.
- Main legislative updates:
- • 2021: Reduction of consent percentage from 80% to 66%
- • 2021: Lowering of eligibility age for seniors from 75 to 70
- • 2023: Extension of capital gains tax exemption to owners of two apartments
- • 2024: Competition Law - intervention between competing developers
- • 2025: Right to cancel contracts with fixed payment (5,000-10,000 NIS)
- • Shortening of replacement period from 24 to 18 months for housing improvers
How Does Pinui Binui Affect Real Estate Prices and the Market?
Pinui Binui projects significantly impact real estate prices in areas where they are implemented, both short-term and long-term. In the short term, even before construction begins, property prices in the area rise due to market expectations and improved neighborhood image.
In the long term, after project completion, the value of new apartments increases by an average of 40-70% compared to old apartments. An apartment originally purchased for 2 million NIS can reach a value of 2.8-3.4 million NIS. Infrastructure improvements, addition of green spaces, and urban environment upgrading contribute to further increases in the value of adjacent properties.
However, there are also potential negative effects. During the interim period, when projects are stuck in long planning stages (many years), temporary damage may occur to the value of old properties. Additionally, gentrification (displacement of disadvantaged populations) may occur, as rent and cost of living increases make it difficult for veteran residents to remain in the area.
Regarding supply and prices in the general market, Pinui Binui contributes to increasing housing supply. Approximately 30% of new apartments approved in recent years result from urban renewal. However, in 2024 only 5,101 apartments were actually demolished despite approved plans for tens of thousands of units, indicating a significant gap between planning and execution.
- Impacts on the real estate market:
- • 40-70% increase in apartment value upon project completion
- • Price increases also in the surrounding area
- • 30% of new apartments come from urban renewal
- • Increased demand for housing in renewal areas
- • Rental yield of 3-4% annually in the center area
- • Implementation gap: only 5,101 apartments demolished in 2024 vs thousands approved
- • Attraction of economically strong populations and young families