TAMA 38: Complete Guide to Strengthening Buildings and Urban Renewal in Israel | חדשות נדל"ן | מרכז הנכסים

TAMA 38: The Complete Guide to Strengthening Buildings and Adding Apartments in Israel

TAMA 38, the national outline plan for strengthening existing buildings against earthquakes, has become one of the prominent engines of urban renewal in Israel in recent years. This program allows residents to significantly upgrade their quality of life and the value of their properties for sale, while strengthening the structure and adding new housing units. In this comprehensive guide, we will delve into the world of real estate under TAMA 38, examining its advantages, disadvantages, and its impact on cities in Israel, including areas like Jerusalem and Ma'ale Adumim.

What is TAMA 38 and How Does it Work?

TAMA 38 is a government program designed to address the national need to strengthen old buildings constructed before 1980, which do not meet the Israeli standard for earthquake resistance (T.I. 413). The program offers financial incentives to developers and residents, allowing for strengthening and renovation projects without residents having to bear the financial costs directly.

Two Main Tracks for TAMA 38:

1. TAMA 38/1 (Strengthening and Addition): This track allows for the fundamental strengthening of the existing structure, renovation of facades, addition of protected rooms (MAMAD), elevators, expansion of existing apartments, and construction of additional floors on the roof of the building. The developer receives additional building rights in exchange for carrying out the work.
2. TAMA 38/2 (Demolition and Reconstruction): In this track, the old structure is completely demolished, and in its place, a new, modern, and safer building is constructed. Residents receive new, larger, and generally upgraded apartments, while the developer receives significantly more building rights for constructing additional apartments for sale.

The decision on the project track is made by the building's residents, by a significant majority, in cooperation with an experienced real estate developer. The developer's role is to manage all stages of the project, from planning and obtaining permits, through execution, to handing over the new apartments.

The Advantages and Challenges of TAMA 38 in the Real Estate Market

TAMA 38 projects offer a wide range of advantages but also present numerous challenges for both residents and developers.

Notable Advantages:

• Safety: Strengthening the building against earthquakes and adding protected rooms significantly increases the safety of residents.
• Property Appreciation: The value of apartments increases significantly, sometimes by tens of percent, thanks to renovations, apartment expansions, and the addition of balconies, elevators, and parking spaces.
• Improved Quality of Life: The entire building undergoes an aesthetic and functional upgrade, including lobby renovations, facades, and infrastructure for water, sewage, and electricity.
• Urban Renewal: The program contributes to the renewal and development of old areas in cities, while efficiently utilizing existing land.
• No Cost to Residents: In most cases, residents are not required to pay for the strengthening and upgrading work, and the costs are borne by the developer who profits from selling the new apartments.

Challenges and Disadvantages:

• Bureaucratic Complexity: The process of obtaining permits is lengthy and cumbersome, and can take many years.
• Residents' Objections: There are often disputes among residents regarding various aspects of the project, which can delay or even cancel it.
• Disruption to Residents: During construction, residents must deal with noise, dust, and disruptions to their daily routine. In the demolition and reconstruction track, residents are required to vacate their apartments for an extended period.
• Planning Limitations: Not every building is suitable for TAMA 38, and there are various planning limitations (such as density, height, etc.) that may affect the scope of the project.

TAMA 38 in Major Cities: Jerusalem, Ma'ale Adumim, and Surroundings

The impact of TAMA 38 is particularly noticeable in cities with an older population and old buildings, such as Jerusalem and its surroundings. In Jerusalem, for example, there are thousands of potential buildings for TAMA 38, and the program greatly contributes to the renewal of old neighborhoods like Rehavia, Talbiya, Katamon, and more.

In nearby cities like Ma'ale Adumim, we also see growing interest in such projects. The city, which has rapidly developed in recent years, also includes older neighborhoods where buildings need strengthening and upgrading. TAMA 38 projects in Ma'ale Adumim can offer an excellent solution for improving housing quality and increasing property values, while maintaining the community character of the city.

The challenges in these areas often include preserving the character of the buildings and neighborhoods, especially in Jerusalem, where there are buildings of historical and architectural value. Local authorities, together with developers, are working to find creative solutions that balance the need for strengthening with heritage preservation.

Data and Trends in the Real Estate Market

• According to data from the Central Bureau of Statistics, since the beginning of the program until the end of 2022, building permits have been issued for about 6,500 new housing units under TAMA 38/2, and for about 20,000 housing units in addition under TAMA 38/1.
• The average increase in apartment value after a TAMA 38/1 project is estimated at about 20-30%, and even more in demolition and reconstruction projects.
• In the Jerusalem district, there has been a significant increase in the number of TAMA 38 applications in recent years, reflecting the great potential in the area.
• The average cost for strengthening an apartment under TAMA 38/1 can reach 200,000-300,000 ₪, with these costs covered by the developer.

The Future of Urban Renewal: Beyond TAMA 38

Despite the success of TAMA 38, the state recognizes the need for more comprehensive and efficient urban renewal programs. With the expected expiration of the program in its current form, alternative programs such as the 'Urban Renewal Law' and district plans are coming into effect, seeking to streamline processes, increase the scope of projects, and better address national needs.

These programs focus on holistic planning of entire complexes and neighborhoods, not just individual buildings, aiming to create a higher quality living environment with modern infrastructure, green spaces, and public institutions. The shift from a point-based program to a district-based program is expected to accelerate the pace of urban renewal and dramatically impact the face of cities in Israel.

We at Merkaz HaNekhasim closely monitor developments in the field of urban renewal, providing our clients with the most up-to-date information and the best professional advice. Whether you are residents looking to upgrade your apartment or developers seeking investment opportunities, we are here to guide you every step of the way.

How to Choose a Real Estate Developer for a TAMA 38 Project?

Choosing the right developer is critical to the success of a TAMA 38 project. Here are several important points to consider:

• Experience and Reputation: Ensure that the developer has proven experience in similar projects and has a good reputation in the market. Ask to see previous projects and obtain references.
• Financial Stability: Ensure that the developer is financially stable and can meet their obligations. This can be checked through financial reports and background checks.
• Legal Support: It is important for residents to have independent legal support that represents their interests against the developer.
• Transparency and Communication: Choose a developer who values full transparency and open communication with residents throughout the project.
• Professional Team: Ensure that the developer works with a professional and experienced team that includes architects, engineers, contractors, and lawyers.

Investing in a thorough vetting of the developer will prevent much heartache in the future and ensure that the project runs smoothly and efficiently.

In Conclusion: TAMA 38 – A Lever for Urban Change

TAMA 38 has been and continues to be a revolutionary program that has changed the face of real estate in Israel. It allows residents to improve their safety and quality of life, and to enhance the value of their properties, all at no direct cost. Despite the challenges, the potential it holds is immense, and it continues to contribute to significant urban renewal in cities like Jerusalem, Ma'ale Adumim, and throughout the country.

We at Merkaz HaNekhasim invite you to contact us for professional advice and personal guidance in the field of urban renewal. Our expert team is at your service with extensive knowledge and experience to ensure you make the best decisions for yourself. Visit our website and discover all the possibilities in the real estate sector!