Buying a home in Ashkelon- a guide
For those who are considering buying real estate in Ashkelon, we hope it will be a fulfillment of your dreams. Buying a piece of Ashkelon may involve mortgages, strange customs and terminology and many unknowns. We are here to answer some of the questions on the whys and wherefores of real estate. Call or e-mail us with any of your questions; we are here to help you fulfill your dream.
Buying an Apartment:
A Step by Step Guide
Here is a general guide on how to go about finding and buying the right property.
Deciding on Location:
1. Look to be close to your contemporaries. Different peer groups tend to cluster together in certain areas. The services in these areas will cater to your needs.
2. Check out local shopping, buses, schools, parks & synagogues to insure they are compatible with your lifestyle.
Type of property:
To save time, make a checklist of absolutely crucial features you require and communicate these to us. Important matters include: maximum number of steps, Shabbat elevator, balcony (succah), garden, readiness to renovate, local area noise, parking, storage, etc.
Once you have decided on the type, size & location of property you want, it’s time to talk about prices, mortgages and costs. Take into account that fees and taxes will add to the price of the property. We will then prepare a short list of properties that match your requirements.
Negotiations may be simple or complex according to the issues involved with a specific property, and also depending on the respective personalities involved in the transaction. We will act to facilitate the transaction, leaving you satisfied with the terms of the deal.
We recommend that negotiations proceed in this order:
Determine what is being sold. Property in Israel is sold with just the bare walls unless otherwise agreed. Appliances, light fittings, even fitted wardrobes and kitchen cupboards are often removed. We will make an agreed list of what is being sold at the beginning of the negotiations.
Determine the price to be paid. Price is a function of location, condition of the property and market conditions. The amount of price flexibility by any given seller will vary according to these factors. We will explain local market conditions to you.
Determine when the property will be vacated. This is always after the final payment is made and can be any time from immediately upon contract signing to about 2 years according to the needs of the parties.
Determine how payments are to be made and in what currency. A typical first payment is between 15%-30% of the purchase price, with the balance spread out over the time between signing & occupancy. It is often customary for some funds to be held in escrow by the attorneys to insure that any liens against the property (e.g. capital gains tax, improvements tax, unpaid bills, etc.) have been paid, and to insure the proper transfer of registration into the buyer’s name. The amount held will vary by property & circumstances, and it is generally an amount agreed to by both sides.
The Legal Stage:
A transaction can be completed in as little as two or three days or as much as a few weeks. It is important to engage a lawyer who has expertise in Real Estate Law. We can recommend a number of good English speaking ones. We strongly urge you not to sign any legal documents without first consulting a competent real estate lawyer.
Upon signing the contract, you should be prepared to make the first payment against the purchase price, your lawyer’s fee and your agent’s commission. These items are customarily due & payable at this point. In addition purchase tax (if applicable) is also due within 50 days of signing. Please coordinate this payment with your lawyer.
Technically our job is now finished; however we at Ashkelon Properties believe in after-sale service – we will be there to advise you after you buy and to help you rent out and manage your property if you so wish.
SOME IMPORTANT FACTS AND TERMS:
People live in a house (BAYIT) or an apartment (DIRAH). The word “Flat” is not (or very rarely) used by Israelis. Terms are confusing: A “cottage” is a dwelling, on more than one level, attached to another dwelling and with a private entrance. A “townhouse” is the same as a cottage, but with it’s own roof. A “villa” is usually a freestanding dwelling. A “penthouse” refers to the top apartment(s) of a building – usually larger than the rest of the apartments in the building and with a large balcony – or roof terrace and more expensive. A “studio” usually refers to a one-room apartment. A “duplex” is any house with two floors.
Israeli house sizes are usually expressed in square meters, and land is measured in dunams.
1 sq. m. = ~10 sq. ft.
1 dunam = 1000 square meters = 0.22239 acres = 9700 sq. ft.
So, if you have half a dunam of land, you have 4850 sq. ft. The real problem is whether a home is measured gross (brutto) or net (netto) and what is included or excluded in these measurements. “Gross” is used for comparing properties for sale. This measurement includes the exterior walls and interior walls of the property and a proportion of the common areas in an apartment building (block of flats). Gross is used when calculating building rights however in this case allowances are made by the planning department (for instance sealed rooms are not included).
“Net” square meters is calculated without interior or exterior walls. Net is used by the municipality to calculate the floor area of a property to levy municipality taxes (ARNONA). The municipality includes, for tax purposes, covered balconies over 6 sq. m., 20% of the area of penthouse balconies and 50% of storerooms. Gardens and parking areas are not included.
What does 3½ rooms mean?
Home sizes are also described in terms of the number of rooms; that is bedrooms and living rooms, and not including bathrooms, toilets, laundry, balconies and kitchens. So, a home with 3 bedrooms, an ensuite bathroom and another bathroom, a separate laundry, a separate kitchen, a living room (salon) and a balcony would be described as 4 rooms; only the bedrooms and the living room are counted. Balconies, which have been enclosed to serve as a room, are sometimes counted as rooms! There is also a concept of “half a room”. This could mean a dining area, a part of a hallway that has been converted to a study, etc.
Financing possibilities include loans and mortgages. For young couples, special mortgages or loans of varying amounts may be available. Olim (new immigrants) are also entitled to various additional loans and mortgages. There are many different types of mortgages: dollar based, shekel based, linked, non-linked; available for periods from 10-25 years, and up to about 60% of the property’s value, as assessed by a professional appraiser. Bullet loans are also available, where interest only is repaid during the term of the loan, with capital being repaid at the end.
Do all homes come with a garage?
Not necessarily but by law, builders of new homes must provide a parking space per dwelling unit.
Older homes, particularly in inner city areas, do not necessarily have any provision for parking, necessitating looking for parking on the street, which is not always easy. In areas where parking restrictions apply, the Municipality provides stickers for residents, allowing free parking in proximity to their homes although in Ashkelon almost all parking is free and readily available.
Do all homes have a separate storage room (MACHSAN)?
Some do. In many homes, people use the “boidem or intersol” for storage; i.e. the area over the bathroom and hallway between the bedrooms with a false ceiling, to allow for storage.
Can you have a wooden exterior, a brick home – are building materials restricted?
The country has various building codes. For example, the Jerusalem building code requires all buildings to have an external facing of Jerusalem Stone. Some older residential buildings have cement or stucco facings. These buildings were erected during periods of time (e.g. the 50’s) when a lot of housing had to be built quickly and cheaply to house the huge influx of new immigrants.
What does “parents’” unit (YECHIDAT HORIM) mean? Do all homes have to have a “secure room”?
Parents’ unit means that there is a somewhat larger main bedroom with an ensuite bathroom and maybe a walk-in closet that is often slightly removed from the other bedrooms. A “secure room” or rather a “protective (sealed) room (HEDER MIGUN)” is a must in all homes built since the 1991 Gulf War. These rooms have reinforced concrete walls, a special steel door & window, a TV & phone connection, electrical outlets and heating. Older buildings, erected from the early 1970’s, are required to have a shelter that could serve all residents of the building. There are also communal shelters (MIKLAT TZIBURI), which are marked, and serve several buildings.
How high can a building be, without needing an elevator ? Can I install an elevator if there isn’t one?
Generally, a building with up to 4 floors is not required to have an elevator. One can have an anomalous situation where a building of 7-8 stories is built on a slope, with the entrance to the building at the 4th floor (street) level, with only 3 floors above. In these situations, no elevator is required by law. However, in newer buildings of three or more floors, it is common to find elevators installed. To install an elevator in an existing building, approval of two-thirds of the owners and agreement of owners of at least 75% of the dwelling area is needed.
What is central heating (HASAKA MERKAZIT)? Am I bound to stick with it? What is a “YUNKERS”?
Central heating means that the building (which contains several apartments) has one large furnace, usually oil-burning (“Solar”) , which provides heating, and sometimes hot water, for everyone in the building. If you wish to disconnect from this system and have private heating, it is possible. You are required to contribute to fuel costs. Private heating can be based on electric convector heaters, or a gas-fueled system (YUNKERS). It is becoming more common to find reverse-cycle air conditioning/heating units installed as well.
If I rent, do I pay municipal rates?
Usually yes. New immigrants are entitled to reductions in rates (ARNONA), as are single parent families, large families, pensioners and students.
What is VA’AD HAB’AYIT?
This refers to the dues levied on all tenants in a building, and covers costs of shared lighting, elevator maintenance, communal heating and hot water systems, cleaning, gardening and National Insurance (BITUACH LEUMI) for building maintenance staff. The amount varies enormously in accord with the type of services provided, and is usually collected on a monthly basis. Major repairs are the financial responsibility of the owners and not of the tenants.
Can I change the outside of my apartment or house – add a balcony, an external staircase or enlarge a window?
In a communal building, any external changes must be approved by the owners in the building and by the Planning Department of the Municipality. In the case of a detached house, the municipality must approve external changes. Where these changes do not conform to the city master plan (TABA), the immediate neighbors have to be informed and can object. Making a change to the TABA is a lengthy and costly process.
How do I know if the sale price quoted is reasonable?
Check with other similar recently sold properties in the area. In the final analysis, if it is what you really want and where you want, then paying some premium above market value may be justified. Owning a piece of Ashkelon has a unique intrinsic value all of its own.
WHAT OTHER COSTS SHOULD I TAKE INTO ACCOUNT?
Real Estate Broker’s Commission:
On the purchase or sale of property, brokers customarily charge both buyers and sellers 2% of the purchase price of the property. Value Added Tax is added to any commission due.
Most lawyers charge between 0 .5%-1% + Value Added Tax.
Purchase Tax in respect to residential dwellings is an incremental (progressive) tax. In order to calculate this you should consult your lawyer.
Converting currencies into NIS
Although some apartment prices in Israel are quoted in USD, the general practice is to pay the purchase price in NIS. Foreign buyers should factor in between 0.75% to 1% bank costs for currency conversion and other fees.
WHAT ABOUT MORTGAGES IN ISRAEL?
Mortgages are available in amounts up to 60% (50% for non - residents) of the value of the property. Please note that the banks, to value properties for quick sale, ask appraisers to value properties 5% to 10% under full market value.
If you are a foreign resident you will be asked to provide banker’s references or accountant’s statements with regard to the last two or three financial years, and possibly a statement of net worth to prove your ability repay the loan.
Important tip: Banks have begun to be very competitive and are prepared to bid against each other, offering lower costs and interest rates when offering foreign currency loans to foreign residents. So get two or three quotes from different banks before deciding which bank to use, and then go back to the bank that seems to offer the best service and ask them to meet or beat the lower quote. You may be pleasantly surprised.
Please feel free to contact us with any questions you may have. We strongly advise that legal questions be referred to a competent real estate lawyer. We will be happy to recommend a lawyer or morgage specialist as well as other professionals who will help make your home search in Ashkelon a pleasant and successful experience.
Estimate of Purchase costs:
Address of property: _________________________________________________________
Estimate of costs as of : _____________________________________________________ :
Sale price of property _________________________________________________
Purchase taxes (see below) ____________________________________
Attorney Fees (buyer) (1%+VAT) _______________________________________
Attorney Fees (seller) (if applicable) _____________________________________
Realtor Fees (2%+VAT) ________________________________________
Finance costs including mortgage – (vary per buyer) _________________________
Municipal taxes (monthly) *__________________________________________________
Building Levy (monthly) * ____________________________________________________
* These costs are covered by the tenants when the property is rented out