What is TAMA 38/2 (National Outline Plan 2):
TAMA 38, known as National Outline Plan #1, in depth and how the Israeli real estate market evolved through that. This season, summer 2021, we would like to introduce TAMA 38 #2 (National Outline Plan 2), also known as “Pinui Binui” — demolish and rebuild. TAMA 38 #2 started in 2010 to ease on developers, owners, and investors with the process of getting permits and to reconstruct a brand-new building instead of using an old structure, often wiping out entire neighborhood to build multiple luxurious high rises. In order to have a solution to housing crisis, provide better living and help the economy, the Israeli government believed that demolishing and rebuilding a brand-new building makes more sense to every party involved. The fact that as a resident or investor you have a faster process to receive a brand-new luxury development on the same pace as TAMA 38/1,is a no brainer to choose that way.
Approved in 2010, TAMA 38/2 created a real estate boom in Israel, even during Covid19, where buildings by buildings, streets by streets, and entire neighborhoods are getting a brand-new look with high-end new developments, luxury buildings, and high-end amenities and finishes. In addition, the streets, roads, and public amenities get a face lift and upgrade as a result of TAMA 38/2 (“Pinui Binui”).
So how does it usually work ?
Upon agreement among majority of owners (80% is required by law), development team and owners work on permits, design, and urban planning in case it involves multiple buildings and public roads. Once a plan is agreed by residents and developer and approved by the local municipality, the project is starting.
What happens to owners during the construction time ?
The developer is required to sponsor a rental apartment for the duration of construction for every unit owner. This will assure that everyone will have a common interest to complete the project on time.
Which TAMA (National Outline Plan) is more popular – 1 or 2?
At the beginning, from 2007 to 2010, TAMA 38/1 was very popular. Once TAMA 38/2 has passed in 2010 and owners understood that they have an option to get a brand-new building with upgraded apartments’ layout, new amenities, parking garage, stronger structure and appreciation up to 40% of their new unit, the market has shifted toward TAMA 38/2 where it’s possible to implement, given location, size, and approvals.
On my ongoing conversations with buyers, realtors, developers, and bankers, it is pretty obvious to see that the real estate market in Israel won’t go down in the near future and with TAMA 38/1 (only 3 years left to get approvals for this way) and TAMA 38/2, the market can only go up.