Fast read. Urban renewal in Israel means knocking down or strengthening old buildings and giving owners a new, bigger apartment paid for by a developer who adds extra units to sell. Two main tracks: TAMA 38 (single building) and Pinui Binui (whole blocks). The upside is real, but timelines run many years and many deals never get built.
- TAMA 38 is closed to new permit applications (cutoff 1 October 2022). Already-permitted projects keep going. New work shifts to the municipal Shaked rapid-licensing track and to Pinui Binui. (Times of Israel)
- Pinui Binui can now override a refusing minority of owners at two-thirds (66%) consent in buildings of 4+ units, down from 80%. (Works in Progress)
- Price tracks the stage. A rumor is worth little. A signed-owner deal with a building permit is worth far more. Each step that clears removes risk and adds value.
- Buy tax for an investor or most foreign residents: 8% up to 6,055,070 NIS, 10% above (frozen to 31 Dec 2026). Renewal can earn a reduced or zero betterment levy. (Kol-Zchut)
- Main risk: delay and deals that stall. Treat any promised completion date as optimistic.
This is a sub-hub of our Israel real estate investment opportunities guide. It explains the whole renewal cluster in plain terms and points you to the deep pages for each question. By the Semerenko Group research desk.
What is urban renewal in Israel, and why does it matter to investors?
Urban renewal means replacing or strengthening old apartment buildings so the same plot of land holds more and better homes. A developer pays for the work. In return the developer gets to build and sell extra apartments. Existing owners get a new, larger, safer unit (often with an elevator, parking, and a safe room) without paying cash. For an investor, the appeal is buying an old, cheaper apartment and ending up owning a brand-new one, with the gain coming from the upgrade rather than the wider market.
Why it matters now: Israel keeps building, but completions lag. Housing starts hit about 81,020 in the 12 months to September 2025 (a record, +31.5% year on year, per the CBS), while completions in 2024 ran near 53,420. Old, central neighborhoods with land value but tired buildings are where a lot of the new supply has to come from. That is the engine.
It is also the biggest fantasy trap. A flyer that says a building “will” be renewed is not a project. Many buildings collect owner signatures and never reach a permit. The skill is telling a real deal from a hope.
TAMA 38 vs Pinui Binui: which renewal track is this?
The fastest way to read a renewal deal is to know which track it sits on. The two tracks differ in scale, who must agree, and how long they take.
| Feature | TAMA 38 | Pinui Binui |
|---|---|---|
| Scale | One building | Whole block (many buildings) |
| Two sub-types | 38/1 strengthen and add floors; 38/2 demolish and rebuild one building | Demolish all and rebuild the block at higher density |
| New permit applications | Closed (cutoff 1 October 2022) | Open and now the main path |
| Owner consent to override holdouts | Building-level rules | Two-thirds (66%) in 4+ unit buildings |
| Typical timeline | Several years (permitted projects) | Often 7 to 12+ years |
| Investor fit | Smaller, simpler, fewer owners | Bigger upside, more delay risk |
What is the difference between TAMA 38/1 and 38/2?
TAMA 38/1 keeps the building and strengthens it against earthquakes, usually adding an elevator, balconies, a safe room, and one or more new floors of apartments for the developer to sell. Owners stay in their homes during much of the work. TAMA 38/2 demolishes the single building and rebuilds it new from the ground up, so owners move out and come back to a brand-new unit. The full breakdown, including which suits which building, is on our TAMA 38 explained (38/1 vs 38/2) page.
Is TAMA 38 still available?
No new TAMA 38 permit applications are accepted; the cutoff was 1 October 2022. Projects that already hold permits proceed, and the transition has been extended into 2026 (the exact end date is not confirmed, so treat any date you are told with caution). New work is being routed to a municipal-led rapid-licensing process known as the Shaked Plan, run under the Government Authority for Urban Renewal, and to Pinui Binui. So if someone sells you a “TAMA 38 opportunity” today, your first question is: does this building already have a permit, or is it just an idea that can no longer start under TAMA 38? See the Times of Israel report on the renewal extension.
How does Pinui Binui work, and what is the two-thirds rule?
Pinui Binui (“evacuate and build”) renews a whole block at once: many old buildings come down and a denser new neighborhood goes up. Owners move out, the developer builds, and owners return to new, larger apartments. Because it is block-scale, it needs many owners to agree, which is why the consent rules matter so much.
The big shift: the threshold to override a refusing minority is now two-thirds (66%) of owners in buildings with four or more units, down from 80% (per Works in Progress). That makes more blocks viable, because one or two holdout owners can no longer freeze a project forever. A holdout can still be ordered to sell by a court if the project is fair and the supermajority is met. For investors this lowers (but does not remove) the “stuck deal” risk. The deeper mechanics are on our how Pinui Binui works page.
How do you price a renewal deal by stage?
Price tracks how far the project has cleared, because each completed step removes a real risk. An early-stage apartment is cheap because it might never get built; a permitted, pre-evacuation apartment costs much more because the upside is nearly locked in. Pay for the stage you are actually at, not for the finished building you are being shown.
The stages, roughly in order, are: (1) rumor, (2) owners signing, (3) supermajority signed and plan submitted to the committee, (4) committee approval, (5) building permit, (6) evacuation and demolition, (7) completion. The gap between stage 1 and stage 5 can be many years and can fail at any point.
| Stage | What it means | Risk left |
|---|---|---|
| 1. Rumor | Talk only, no signed owners | Very high (may never start) |
| 2. Owners signing | Some owners signed a developer agreement | High |
| 3. Submitted | Supermajority signed, plan filed with the committee | Medium to high |
| 4. Committee approval | Plan approved in principle | Medium |
| 5. Permit | Building permit issued, work can start | Lower |
| 6. Evacuation | Owners moving out, demolition near | Low (mostly build risk) |
| 7. Completion | New building done and handed over | Minimal |
Our own worked example (not an official figure). Say a finished new apartment in the area would be worth about 2,500,000 NIS, and a developer needs roughly 2 years of construction plus realistic delay. If you only accept a 10% annual return for the time and risk you carry, then a permitted, pre-build unit (stage 5 to 6) might rationally trade near 2,500,000 / (1.10 squared) = about 2,066,000 NIS. An earlier-stage unit with, say, 5 years of waiting and failure risk should sit far below that: 2,500,000 / (1.10 to the power 5) = about 1,552,000 NIS. The math is simple: more waiting and more risk means a lower price today. Always confirm the local comparable value yourself; these inputs are illustrative. The full method, with real local comps, is on our pricing a renewal deal by stage page.
Does renewal actually raise property value?
Usually yes, but the size and timing of the gain depend on the stage and the area. The value lift comes from turning an old unit into a new, larger one with parking, an elevator, and a safe room, on the same valuable land. The closer a project is to a permit, the more of that future value is already priced in, so buying early is where the bigger discount (and bigger risk) sits.
Our own worked example (not an official figure). Suppose you buy an old unit at stage 2 for 1,400,000 NIS and the finished new unit is worth about 2,500,000 NIS. The headline gain looks like 2,500,000 minus 1,400,000 = 1,100,000 NIS, or about a 79% rise. But spread that over, say, 6 years and the compound growth is only 1,400,000 times (1 + r) to the power 6 = 2,500,000, which solves to about 10.1% per year before costs, tax, and the chance the deal slips or dies. That is a useful return, not a lottery win, and it assumes the project completes. The detailed value analysis is on our do TAMA 38 and Pinui Binui raise value? page.
What are the risks and delays?
The main risks are time, dead deals, and a developer who cannot deliver. Renewal projects routinely take many years and a large share never reach a permit. Your money can sit in an old apartment for a decade while you wait, and in the worst case the project collapses and you are left owning exactly what you bought: an old unit.
Common failure points: not enough owners sign, the plan is rejected or shrunk by the planning committee, the developer runs out of money, construction costs spike, or a holdout fights in court. Even after a permit, building can stall. Treat any promised “move-in date” as the earliest possible date, not a likely one. The risk checklist and red flags are on our renewal risks and delays page.
What should you verify before you sign?
Verify the stage, the developer, and the paperwork before any money moves. A page covering the full buyer verify checklist is coming; for now, run these basics. Do not rely on a salesperson’s summary; have an Israeli real estate lawyer confirm each item from the documents.
- Confirm the real stage. Ask for the actual permit or committee decision, not a marketing brochure. “Approved” can mean many different things.
- Check signed-owner percentage. For Pinui Binui, is the two-thirds threshold actually met, in writing?
- Vet the developer. Past completed projects, financial backing, and a bank guarantee (Chok Mechר / sale-law protection) for your payments.
- Read the owner-developer agreement. What exactly do you receive (size, floor, parking), and what are the developer’s deadlines and penalties?
- Confirm rights register (Tabu / Israel Land Authority). Make sure the title is clean and matches what you are buying.
- Get tax and levy advice in writing before signing (see below).
How is urban renewal taxed in Israel?
Renewal can come with tax relief, but the rules are specific and a dedicated tax page is coming, so confirm everything with a licensed Israeli tax lawyer before you sign. For now, the figures you most need to plan with: as an investor or most foreign residents, purchase tax (Mas Rechisha) is 8% up to 6,055,070 NIS and 10% above, a band frozen to 31 December 2026, per Kol-Zchut. Verify current figures before relying on them.
The renewal-specific point is the betterment levy (Hetel Hashbacha): normally 50% of the planning value uplift, paid by the owner at realization, but urban renewal projects may qualify for a reduced 25% rate or an exemption (per a Jerusalem real estate betterment-tax guide). When you later sell the new apartment, capital gains tax (Mas Shevach) is generally 25% on the real gain. Wider tax rules sit on our Israel real estate tax sub-hub.
Can foreign buyers join an Israel renewal deal?
Yes, foreign buyers can buy apartments inside renewal projects, with a few practical limits, and a full foreign-buyer page is coming. The two things that bite most are tax and financing. Most foreign residents pay the higher investor purchase-tax band (8% to 10%, as above), and banks in practice lend foreign buyers around 50% of value, not the higher amounts an Israeli first-home buyer can get; under Bank of Israel loan-to-value rules an additional-property buyer is capped at 50% regardless. That practice figure is not a published cap, so treat it as a guide and confirm with a mortgage advisor.
For context on who is buying, foreign buyers are roughly 10% of investment-apartment transactions (ITA data, 2021 to 2024), a segment figure, not all purchases. The slower, multi-year nature of renewal also matters more for a buyer who lives abroad and cannot easily oversee a project. How renewal fits a wider plan sits on our investment strategies sub-hub.
Quick action checklist
- Identify the track (TAMA 38 permitted, Shaked, or Pinui Binui) and the exact current stage.
- Get written proof of stage: permit, committee decision, signed-owner percentage.
- Price for the stage you are at, not the finished building.
- Vet the developer and confirm a bank guarantee on your payments.
- Get purchase tax, betterment levy, and capital gains advice from a licensed Israeli tax lawyer.
- If buying from abroad, line up financing early (assume about 50% lending) and plan for a long hold.
Next step: decide your track and stage tolerance first, then have a lawyer confirm the paperwork before any deposit. If you want help reading a specific renewal deal, talk to the Semerenko Group team.
Reviewed by the Semerenko Group brokerage team. Last updated 15 June 2026. This page is general information, not tax, legal, or financial advice; confirm all tax, legal, and finance figures with a licensed Israeli tax lawyer or mortgage advisor before you act.
Sources
- Times of Israel: urban renewal provisions extended
- Works in Progress: Israel renewal and the two-thirds consent rule
- Kol-Zchut: purchase tax (Mas Rechisha) bands
- Betterment tax (Hetel Hashbacha) guide
- Bank of Israel: loan-to-value limits
- CBS: construction begun and completed
- Ynetnews: foreign-buyer share of investment apartments
Common questions
Is TAMA 38 still available in 2026?
No new TAMA 38 permit applications are accepted (the cutoff was 1 October 2022), but projects that already hold permits keep going, and the transition has been extended into 2026 with the exact end date unconfirmed. New renewal work now goes through the municipal Shaked rapid-licensing track and Pinui Binui.
What is the difference between TAMA 38/1 and 38/2?
TAMA 38/1 keeps the building and strengthens it, usually adding an elevator, safe rooms, and extra floors the developer sells. TAMA 38/2 demolishes the single building and rebuilds it new, so owners move out and return to a brand-new apartment.
How many owners must agree for Pinui Binui?
In buildings with four or more units, two-thirds (66%) of owners can now move a Pinui Binui project forward and override a refusing minority, down from the old 80% threshold. A holdout can be ordered by a court to sell if the supermajority is met and the deal is fair.
How should I price an apartment in a renewal project?
Price by the project’s stage. A rumor is worth little; a permitted, pre-evacuation unit is worth far more because most of the risk is gone. Each cleared step (signed owners, committee approval, building permit) removes risk and raises the fair price, so never pay finished-building money for an early-stage deal.
Can foreign buyers invest in Israeli urban renewal?
Yes. The main limits are tax and financing: most foreign residents pay the higher investor purchase-tax band (8% to 10%), and banks in practice lend foreign buyers around 50% of value. Confirm both with a licensed Israeli tax lawyer and a mortgage advisor before committing.
