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When the world economy is in a state of stagnation, the flow of new immigrants is growing in Israel, and the demand will grow accordingly. The development market is recovering, realtors and lawyers in Israel receive requests from potential buyers and investors, moving is not canceled, and the need to invest money increases.
For those who are still unfamiliar with the process of purchasing real estate in Israel, it may seem strange to mention a lawyer next to a realtor. In fact, it is the lawyer who is the main player in the field when buying real estate, often people turn to them before they start looking for a suitable home.
So, it is the lawyer in Israel who is the main participant in the transaction in real estate purchase and sale operations. You can't make a purchase without their involvement. The realtor can also participate in the process, but this is not mandatory. A notary does not participate in real estate transactions at all.
A lawyer can be hired by both the seller and the buyer, each party can have one, but sometimes the same lawyer protects the interests of both parties. I do not recommend the second option: in real estate transactions (and land law in general), there are statistically lots of cases of lawyer malpractice, so it is better that each party has its own lawyer who will defend the interests of the client.
The Israeli lawyer fully conducts the process of buying realty starting with checking the cleanliness of the property and drawing up a preliminary agreement that confirms the seriousness of the intentions of both parties, and ending with making an entry in the land registry.
Professional support is really important at all these stages: it allows you to prevent fraud, speed up the process, save money and, importantly, nerves. After the transaction is completed, the client often transfers the property to the trust management of a lawyer for further leasing or as an investment project.
Often large developers have a contract with a law firm that deals with all transactions for the sale of their properties. This may seem very attractive to the buyer, since, at first glance, it saves them money. Still, it is worth remembering that the developer's lawyer will only defend the developer's interests. This does not mean that you are necessarily going to be deceived, but even if we talk about a standard contract for the purchase and sale of real estate, it is in the part of payment that there are usually the greatest number of edits and contradictions.
The lawyer must check that the interests of their client are protected, in particular, from sanctions against the buyer, because of which they may suffer losses. Often in the paragraphs of the contract where sanctions are prescribed, various circumstances that have arisen through no fault of the buyer are not taken into the account, such as an objective inability to transfer funds in a timely manner, problems with the bank, and even the seller's non-received assistance for mortgage registration. In this part of the contract, you also need to pay attention to linking prices to various indices. As a result, they can significantly change the final cost of the apartment. All these details must be clearly spelled out in the contract, so that the client does not suffer in the future.
An experienced lawyer who specializes in the land law understands which points of the contract should first of all be paid attention to and what comments should be made. And if this lawyer also has experience working with a specific developer and the lawyers who serve it, this will be a big plus for the buyer. Clearly, having your own lawyer will not increase your expenses at the end, but will help you to reduce them.
In Israel, when buying real estate, bank security boxes are not used, and in principle cash amounts are not in use, most of the transactions involve non-cash payment.
When drawing up a preliminary agreement, the buyer sends the lawyer (their own or on the seller's side) a check or transfers money to their trust account. The money will not get to the seller until the lawyer makes a record in the land registry that the apartment already has a contract of sale. Such a record prevents possible fraud against the buyer. Namely, it guarantees that the seller can no longer make an alternative transaction (for example, a sale to a third party) with this property).
Only then the lawyer transfers the bank receipt to the seller or makes a bank transfer. Then the transaction continues in accordance with its terms. For example, a payment schedule or a mortgage is formed.
Mortgage loans in Israel are in demand and are available even to foreigners. Rates here are humane from 3 to 5% per annum.
Getting a housing loan is a simple process, but it has its own Israeli specifics, so it is better to do this with the support of professionals. The Israeli bank will require information about the applicant's income and their origin, as well as confirmation that should convince the bank that you have enough funds to pay the mashkanta (mortgage).
By the way, in the process of obtaining a mortgage, you may need a notary. The bank may require a certified translation of all documents explaining your income and motivation.
The maximum term of a mortgage loan in Israel is 30 years, and the interest rate on it and the minimum down payment will depend not only on your history, but also on your status in terms of immigration law. For example, for foreigners, the conditions for issuing a loan will be stricter (including the provision of necessary documentation), and the minimum initial payment will be higher.
An Israeli who does not even live in the country can get a mortgage of up to 75% (usually 60%) of the apartment price (if this is the first home in Israel), while a foreigner must make at least 50% of the housing cost from their own funds as a down payment.
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In Israel, a progressive tax scale is applied for the purchase of real estate, which depends not only on the property price, but also on the immigration status of the participants in the transaction.
An Israeli citizen will have a zero tax rate on an apartment worth up to 1,744,505 shekels. The interest increases with the cost of the apartment:
For those who purchase a second apartment, the tax will be as follows: 0-5 194 225 shekels – 8%, over 5 194 225 shekels – 10%.
For new immigrants (within six years from the date of obtaining the status), the tax on the purchase of housing worth up to 1,838,615 shekels will be 0.5%, for more expensive real estate – 5%.
We make an individual calculation for each client and see whether it is worth declaring their status as a new repatriate when purchasing. As a rule, this is relevant only in cases of purchasing luxury real estate.
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