Rehabilitating buildings damaged by missiles by way of pinui-binui (evacuate and rebuild)

The Law in brief

The Law is not an amendment to the Pinui-Binui (Compensation) Law (חוק פינוי ובינוי (פיצויים)) and is not a temporary provision. It is a separate framework prepared after Operation "Rising Lion" in June 2025, and updated following the strikes in early 2026. It should not be confused with the 1965 Building and Evacuation of Rehabilitation Areas Law (חוק בינוי ופינוי של אזורי שיקום), which deals with a different subject.

Declaring a rehabilitation and renewal area

The track opens only by an order of the government, or of a ministerial committee authorised to do so, on the recommendation of the advisory team section 3. An area can be declared if it contains at least one building that the local authority engineer has determined is destroyed or must be demolished. Even without a destroyed building, an area of at least three buildings and 12 apartments can be declared, where engineering opinions determine that the damage is significant and that repairing it will take a long time.

Buildings that were damaged but not destroyed can be added to the area, as can buildings that were not damaged at all, if the district planner has determined that this is necessary for planning reasons. Adding undamaged buildings is limited to a quarter of the number of buildings in the area and, together with vacant plots that are added, to no more than 40% of the area's land section 4.

The required majority

Instead of the usual pinui-binui majority, the Law defines a "special majority of the apartment owners", which is met in one of two ways section 2:

• the owners of a majority of the apartments in a majority of the buildings in the area, or
• the owners of four fifths (80%) of all the apartments in the area.

To start the building permit process, the consent of 51% of the rights holders is enough. Before the permit is granted, notice must be sent to those who did not consent, giving them 15 days to object, or the consent of all the rights holders must be submitted section 28.

The planning track and timetables

The Law sets deadlines for each stage, and moves the planning to a national body if the local authority does not meet them:

1. Freeze

   From the date of the declaration, no building or use permits are granted in the area, for a period of up to 60 working days section 14.

2. Notice and submission of a plan

   The local authority gives notice within 21 days that it intends to submit a plan, submits it within three months and deposits it within six section 16.

3. Decision

   The local planning committee decides within 12 months of submission section 19. If a deadline is missed, the plan moves to the National Committee for Preferred Compounds (VATMAL) sections 21-22.

4. Protecting the plan

   For ten years, no competing plan that may delay the approved plan can be approved section 24.

5. Building permit

   A plan covering up to six dunams has a shortened permitting track, and an application for a permit can be submitted even before the deposit, subject to conditions section 25.

Betterment levy

The Law sets a special arrangement for the betterment levy arising from the approval of a rehabilitation and renewal plan, which overrides sections 3 and 3A of the Third Schedule to the Planning and Building Law (חוק התכנון והבנייה):

• The base rate in the Law: a quarter of the betterment section 30(a).
• The local authority's power: within 30 working days of the date of the war damage or of the date the Law came into force, whichever is later, the local authority may set, for the rehabilitation area within its jurisdiction, a rate of half the betterment, or decide that no levy will apply at all section 30(b).
• Where half was set: 30% of the levy is earmarked for the rehabilitation area itself.

For a plan that is a value-enhancing plan in a pinui-binui compound as defined in the Metro Law (חוק המטרו), special coordination provisions were set section 30(c). In a plan that includes consolidation and subdivision without the owners' consent, the value of a damaged plot is assessed as if it had not suffered war damage section 23(b)(1).

This is a summary only. Every case should be reviewed individually with a lawyer who specialises in the field.

Appraisal, a rehabilitation transaction and an exit agreement

Each apartment owner in the area chooses between two options:

Timetable from the date of the declaration

This is a summary only. Every case should be reviewed individually with a lawyer who specialises in the field.

The value basis and the addition in an enhanced exit agreement

The value is set according to a similar new apartment in the area, on the day before the war damage, and will not be less than the market value of the apartment in a voluntary sale. In an enhanced exit agreement, one third of the additional area set in the local committee's policy is added to the apartment's area, or 4 m² of main area where there is no such policy. The appraiser may reduce the addition for a particularly large apartment compared with a typical apartment.

Approval of a rehabilitation developer and payment of the consideration

• Developers apply for approval as a rehabilitation developer between the 50th and the 95th working day after the declaration, and the director of the Government Authority for Urban Renewal decides within 15 working days section 40.
• The order of priority between developers is set by the volume of transactions signed and by meeting the special majority. A transaction that was not reported to the Authority is not counted.
• After approval, the rehabilitation developer must, within 30 working days, approach every apartment owner who has not signed and offer them a rehabilitation transaction and an enhanced exit agreement section 43. Exit agreements signed with other developers are transferred to it.
• The developer pays the consideration under an exit agreement within 90 days of its approval or of the deposit of the plan, whichever is later. An apartment owner may ask to defer the payment, at the latest until the date of evacuation for construction.
• The director of the Compensation Fund may finance the developer's purchase of the rights of apartment owners who chose to exit, under the threshold conditions published by the Israel Tax Authority, and may also take part in financing a project that is not economically viable, up to the cost of repairing the damage section 45.

Older apartment owners

For the purposes of the Law, an older person is an apartment owner who had reached the age of 70 on the date of the war damage, under the conditions in the Law. Such an owner is entitled to be offered, in addition to an apartment in the project, alternatives that suit them.

• The first alternative, in which the apartment owner chooses one of these options: moving to an old-age home or to sheltered housing with balancing payments, purchase of a replacement apartment of similar value (to be handed over before the existing apartment is vacated, and near it if requested), or a cash payment for buying an apartment.
• Two apartments whose combined value is similar to the value of the consideration apartment.
• A smaller consideration apartment, with balancing payments.

For an apartment owner who had reached the age of 75 on the date of the damage, a terminally ill person and a person entitled to a long-term care benefit, the rehabilitation developer must offer the first alternative, under the conditions in the Law.

This is a summary only. Every case should be reviewed individually with a lawyer who specialises in the field.

An apartment owner who refuses

The draft Law included an expropriation mechanism, but it was removed. In the final text, the rehabilitation developer may sue an apartment owner who refuses to sign a rehabilitation transaction or an exit agreement. The court may:

• order the apartment owner to sign a rehabilitation transaction or an exit agreement;
• order the cancellation of their transaction with another developer, to allow signing with the rehabilitation developer;
• appoint a lawyer or an accountant to sign on their behalf.

The considerations include: the extent of the damage in the area, the proportion of apartments unfit for habitation and the proportion of owners who have signed, the harm to the defendant and the possibility of reducing it, the developer's good faith and the uniformity of the terms it offered, the economic feasibility (an appraiser's determination creates a presumption), the alternative housing and adjustments for people with disabilities, the securities, and the alternatives offered to older apartment owners. A claim to evict the apartment owner from the apartment is filed with the same court that heard the claim to order them to sign.

This is a summary only. Every case should be reviewed individually with a lawyer who specialises in the field.

The Property Tax and Compensation Fund, and rent

The Law amended the Property Tax and Compensation Fund (Payment of Compensation) (War Damage and Indirect Damage) Regulations, 5733-1973 (תקנות מס רכוש וקרן פיצויים (תשלום פיצויים) (נזק מלחמה ונזק עקיף), התשל״ג-1973), with regard to buildings in a rehabilitation area:

• Compensation for the damage to the building: the director of the Compensation Fund may defer payment of the compensation for the damage to a building in a rehabilitation area, taking into account the ratio between the cost of repair and the cost of alternative housing, and whether the building can be repaired at all.
• Rent until construction starts: when payment of the compensation is deferred, the Property Tax and Compensation Fund pays the apartment owner reasonable rent, until the developer starts building.
• Rent from the start of construction: from the time the developer starts building, the developer pays the rent, as in any regular urban renewal project. The agreement with the developer should state this expressly and secure it with a guarantee.

The arrangement applies to damage caused from 13 June 2025 onwards.

Taxation

• Land appreciation tax (mas shevach), purchase tax and VAT in a rehabilitation transaction: the Law applies to a rehabilitation transaction exemptions and reliefs similar to the pinui-binui arrangements in the Real Estate Taxation Law (חוק מיסוי מקרקעין).
• Exit agreement: for tax purposes, an exit agreement is treated as two transactions: exchanging the rights in the apartment for a right to a consideration apartment, and selling the right to the consideration apartment to the developer for money. The land appreciation tax exemption on the sale is conditional, among other things, on purchasing a replacement residential apartment within the period and at the proportion of the value set in the Law.
• Older apartment owners in regular pinui-binui: the Law also amended section 49כב2(א) of the Real Estate Taxation Law, so that the date for selling the right to the consideration apartment to the developer is deferred to the "date of sale".

This is a summary only. Every case should be reviewed individually with a lawyer who specialises in the field.

The compounds declared so far

By September 2026, nine rehabilitation areas had been declared in eight cities. According to published reports, about 900 existing apartments will be replaced by about 2,470 new apartments.

The figures are based on publications of the Government Authority for Urban Renewal and on media reports, and may change at the planning stage. Up-to-date list: the Urban Renewal Authority website.

What to do if your building is in a declared area

1. Check that the building is inside the area

   In the declaration order, on the Government Authority for Urban Renewal website and in the local authority's notice.

2. Pass information to the government appraiser

   Renovations, extensions, invoices and photos, within the short deadline set from the date of the declaration.

3. Check the appraisal

   The appraisal is published on the Appraisal Department's website and as a printed copy at the local authority. If there is a gap, consider an objection with the help of a private appraiser.

4. Get organised

   Choose a residents' committee and a lawyer for the apartment owners, and check whether the authority funds professional support.

5. Decide: a new apartment or exit

   Check the tax implications, the mortgage and the securities before signing, within the deadline in the Law.

6. Follow the planning

   The local authority's notice, the deposit of the plan and the deadline for objections.

Frequently asked questions

This is a summary only. Every case should be reviewed individually with a lawyer who specialises in the field.