Types of land in Israel
The three different categories of land in Israel are: those which may not be purchased by foreign citizens; those which may be purchased by foreign citizens, yet are subject to various conditions; and those which may be purchased by foreign citizens not subject to any conditions.
The overwhelming majority of land in Israel is owned by the State and only a small minority is under private ownership. A negligible portion of land in Israel has not yet been categorized into either of these two areas.
Approximately 7% of the allocated land in Israel is privately owned. The rest, i.e. 93%, is owned by the State and is known as “Israeli Land”. Israel’s Basic Law on real estate states that Israel’s Land is jointly owned by the State (69%), the Development Authority (12%), and the Jewish National Fund (12%). While the law expressly forbids transferring of such land either by sale or other means, it does imply that a long term lease would be permitted.
State-owned land includes all land that was subject to the British Mandate prior to the foundation of the State of Israel and was requisitioned by the government subsequent to its establishment. Development Authority-owned land includes land that was confiscated in accordance with the Absentee Land Law and the Land Purchase Law. JNF-owned land consists of land purchased before and after Israel’s inception. The JNF’s by-laws grant it a fiduciary role, stipulating that land it owns shall be held for the benefit of and in trust for the Jewish people. This principle has so far been respected and was solidified in a treaty entered into between the JNF and the State. A bill has recently been submitted to the Knesset (Israel’s parliament) with the interest of legislatively solidifying this principle and is likely to be passed in the near future.
State-owned land (”Israeli Land”) is administered by the Israel Land Administration (ILA). Being a government-orchestrated entity, the ILA exercises very limited powers, namely: the administration of State-owned land. The ILA is required to remain faithful to the purpose for which it was established and may not deviate from its authority. Furthermore, being a government entity, the ILA is subject to legislatively mandated modes of behavior, such as equality in hiring standards and the proscription of discriminatory practices.
While there is no legislative mandate prescribing the objectives the ILA must advance, these have been established through judicial precedent. A seminal ruling dictating these objectives can be found in the Israel Supreme Court case of Adal Ka’adan v. the Israel Land Administration:
“…The objectives that comprise the core authority of the Israel Land Administration are the continuation of State control of Israeli Land and the perpetuation of the administration and development of land in Israel under the concentration of a singular government entity. This is to prevent the transfer of ownership to non-favorable entities, to advance security issues and to authorize the operation of different national projects – such as: the absorption of new immigrants, the proper distribution of the population and agricultural settlement…”
Now that I have clarified the different types of land prescribed under Israeli Law, I would like to discuss the opportunities existing for their acquisition. In principle, land that is owned by the Jewish National Fund can be leased to Jews only. The implication is that foreigners, as well as Israeli citizens and/or residents who are not Jewish, are not entitled to lease this land. Nevertheless, the land that is owned by the Development Authority and by the State can be leased to any citizen of Israel, whether he is Jewish or not. Foreigner’s who are Jews and are entitled to immigrate to Israel under the Law of Return may also lease this land.
It is our experience, though, that in spite of the aforementioned limitations, foreigners who are not Jews can also lease land from the Israeli Land Administration, although this would be subject to approval by a specially convened committee. Such approval, should it be granted, is subject to submission of a cogent and persuasive letter demonstrating the potential contribution the applicant can make to Israel. Recommendations from several Israeli sources attesting to this can also smooth the way to receipt of approval. Another option is to register a company and/or a not for profit organization in Israel and ensure that this entity has a board primarily comprising Israeli citizens.
The 7% of privately owned land is much less restrictive. The owner of such land may transfer his ownership to any other person, whether he is Jewish, non-Jewish, Israeli or non-Israeli.
Most of the privately owned land in the country is located in urban areas, chiefly in the large Israeli cities of Tel Aviv, Jerusalem and Haifa. This is ascribed to the State not having requisitioned such land prior to its inception. This land, due to its geographical location and owning to the relative dearth of privately owned land, is in great demand today. Once again, there is no restriction on purchasing this land, irrespective of the potential buyer’s religion or nationality.
For legal advice in purchasing real estate in Israel contact Michael Decker: