Pinouille Binouille
Pinouille Binouille
Urban renewal is of the utmost importance in Israel given the state of buildings throughout the country. Virtually all buildings built before 1980 will not survive an earthquake. And there will be one, the only question is when and how big it will be. Some laws have been established to deal with this problem, such as the Tama 38 program that has been in place since 2005.
The idea is to strengthen and bring old buildings up to current safety standards. However, the problem remains for buildings in poor condition. The cost of renovation would be more expensive than reconstruction.
This is why another law was approved in 2016 in this sense. Its goal is to replace buildings that are too deteriorated with new ones. This law is called Pinouille Binouille or Evacuation Construction. It affects not only buildings but urban areas where all old residential buildings will be demolished.
New residential buildings with modernized and improved infrastructure will be built in their place. These new neighborhoods will be populated much more densely than before.
How does the pinouille binouille go?
As with any other project, a meeting of the parties concerned is first required. The owners, tenants and/or developers meet to prepare the plan. The contract signed by all will contain all the necessary conditions for the owners, tenants and developers.
Important points of the contract
- The developer promises the owners a new home in the same area or in a larger one.
- The developer will also pay rent and taxes during construction.
- The developer demolished the building and rebuilt another, improved one, adding apartments on additional floors, following the building permit received.
- The residents of the building receive compensation, generally the right to alternative housing close to or not to the site of the works. This compensation can also be monetary.
Urban renewal projects are reviewed and authorized by the Ministry of Construction and Housing. It is the local authorities who will plan and approve the projects submitted by residents and developers. As soon as a project is accepted for pinouille binouille, the government will offer benefits to residents and contractors.
This means that they will be exempt from purchase tax, improvement tax and VAT on construction services.
Problems and risks
The first big problem is to get permission from all or most of the tenants in the building. You have to understand that this is not a simple thing. For one or more years, they will not be able to live in their accommodation. This means additional costs, and big changes in the daily lives of parents and children.
This is especially true if their temporary accommodation is far from their usual neighborhood. The costs will also be higher in the new building following the negotiations. For old people, changes are hard and they are very reluctant to give their permission.
For contractors and/or developers, such a project involves a lot of risks. Their costs are heavy and multiple. They must not only demolish the building, but rebuild it bigger and better than before. They must pay the rents of the residents up to a certain amount for the entire duration of the work. However, they will be able to sell the additional housing that they have built. They will not have to pay the land or several taxes including that of the improvement.
They will also receive increased building rights, which will allow them to make more profits.
The risk for owners in construction evacuation projects is when the work is suspended. Whatever the reason for the suspension, it can be financial difficulties of the developers, their bankruptcy.
But also if they do not find enough buyers for their new homes. In this case, the evicted residents find themselves in a difficult situation. They no longer have an apartment since it has been destroyed, but they do not have their new home either. To avoid this risk, it is essential to obtain a foolproof guarantee from the developer.
