In the previous Knesset and also in the current Knesset, we initiated the submission of a bill intended to create a fair balance between leaseholders and the registered owners of the land, and we built a coalition of Members of Knesset to support the law. At the same time, we also worked with various government ministries in order to encourage them to support the legislation.

In the current Knesset, the 25th, more than 60 Members of Knesset have signed in support of the bill. The supporters come equally from the coalition and the opposition. It could have been expected that, in light of the overwhelming majority of Members of Knesset who supported the bill, it would be advanced, but unfortunately there were parties who acted to block any progress of the bill. We do not give up and hope to succeed in passing the bill in the next Knesset.

What does the bill provide?

The bill establishes two central principles:

1. Lease extension

Leaseholders will have the right to extend the current lease for an additional period identical to the current one, under the same terms that applied during the previous lease period. The payment for extending the lease will be determined in accordance with the practice of the Israel Land Authority and will be based on the value of the land excluding the built structures. The extension of the lease will not be considered a real estate transaction for tax purposes.

In this way, the ownership right of the landowner is preserved, while leaseholders can continue to live in their homes under fair conditions.

2. Right of first refusal for leaseholders

If the landowner wishes to sell their rights, the leaseholder will have a right of first refusal to purchase the land if the owner seeks to sell it.

Why is the proposed bill justified?

This is a unique situation. Leaseholders paid the full price for their homes, and they are the ones who built and maintained them over the years. In contrast, the landowners neither built the homes nor maintained them.

Therefore, there is no justification for landowners to receive, at the end of the lease period, the homes that were built by the leaseholders. The law is intended to prevent a situation in which assets of enormous value are transferred from those who paid for them to those who did not.

How the issue has been addressed worldwide

Israel is not the only country dealing with such a problem. In many countries, the legislature has intervened to protect leaseholders. For example, in England, the law allows leaseholders to extend their leases and even purchase the land on which their homes are built. In Ireland, the law grants leaseholders the right to purchase the land on which their homes are built. In Hawaii in the United States, land was transferred from landowners to leaseholders to address concentration in the land market. In Scotland, the long term leasehold system was completely abolished and the land was transferred to the ownership of the leaseholders.

Courts around the world have determined that such laws are constitutional, since protecting citizens' housing is an important public purpose. For example, the European Court of Human Rights, before which the English law was reviewed, held that legislation requiring landowners to sell leased homes to leaseholders or to extend their leases is constitutional, proportionate, and serves a legitimate purpose (James v United Kingdom). Similarly, the Supreme Court of the United States held that legislation transferring ownership of land from landowners to leaseholders in order to address market failures serves a legitimate public purpose (Hawaii Housing Authority v Midkiff).