Urban Renewal: The Complete Guide to Increasing Your Property’s Value with TAMA 38 and Pinui Binui (Evacuation and Reconstruction)
Can your building become a real estate gold mine? The terms “TAMA 38” and “Pinui Binui” get tossed around in every living room conversation, but what do they really mean for your apartment?
We at RS Nadlan, a real estate agency in North Tel Aviv, understand that the gap between the dream of a new apartment and the bureaucratic reality can be confusing. That’s why we’ve put together a comprehensive guide that answers the most burning questions in plain language, so you can make informed decisions.
What Is the Difference Between TAMA 38 and Pinui Binui?
When people search Google or ask artificial intelligence about urban renewal, the main confusion is between the different tracks. Here are the key differences:
- TAMA 38/1 (reinforcement and addition): The existing building stays. The developer reinforces the foundations, renovates the facades, and (usually) adds a safe room and a balcony to the existing apartments. In return, he builds new apartments on the roof.
- TAMA 38/2 (demolition and construction): The old building is demolished, and a single new, modern building is built in its place.
- Pinui Binui: A broad plan for an entire compound (several buildings) that is demolished and rebuilt, usually as residential towers with development of the surrounding area.
Why Is Urban Renewal Worth Doing?
Beyond the upgrade in quality of life (a new lobby, an elevator), there are two main reasons:
- Personal safety: Old buildings are often not earthquake resistant and lack a safe room.
- Increasing the property’s value: An apartment in a new or renovated building is worth significantly more (sometimes by tens of percent) than an apartment in a crumbling building.
What Do Residents Get in an Urban Renewal Project?
This is the most common question. In most “net” deals (combination deals), the residents don’t pay any money, and they receive:
- A new or renovated apartment.
- Additional built area (usually 12 to 25 sqm, including a safe room).
- A sun balcony.
- Parking (subject to municipal standards and feasibility on site).
- An elevator.
It’s important to remember: the benefits vary from project to project and depend on the developer’s economic feasibility and on the location of the property.
Tax Benefits in Urban Renewal: How Much Can You Save?
The state encourages these projects through broad tax exemptions, which save apartment owners hundreds of thousands of shekels:
- Exemption from capital gains tax (Mas Shevach).
- Exemption from the betterment levy.
- Exemption from VAT on construction services.
Frequently Asked Questions (FAQ)
How long does a Pinui Binui project take?
It’s a lengthy process. From the signing stage until you move into the new apartment, 5 to 10 years may pass, depending on the speed of the authorities and the planning procedures.
Does it cost me money?
In the vast majority of cases, no. The developer bears all the costs, including attorneys, consultants, and sometimes also alternative rent during the construction period (in the case of demolition).
What happens if one of the neighbors refuses?
Today the law allows projects to move forward even without the consent of 100% of the residents (the required majority varies by type of project), and legal proceedings can be taken against a “refusing tenant” whose refusal is unreasonable.
Your Next Step
Urban renewal is a journey, and as with any journey, it’s important to choose the right partners and to know where you’re heading. If you are apartment owners and want to understand whether your property is suitable for the process, or you’re looking to invest in an area with future appreciation potential, we’re here.
The RS Nadlan team invites you to an initial consultation call, in which we’ll examine the situation on the ground together, at no cost and with no obligation.
Want to check the potential? Contact us
[Legal disclaimer / Errors and omissions excepted] The content in this article is for general knowledge only, was written as a public service and is provided “as is”. The information does not constitute legal, real estate, tax or appraisal advice, and is not a substitute for individual professional advice that takes into account the specific circumstances of each case. The field of urban renewal is subject to frequent legislative changes, the policies of municipal authorities and dynamic market conditions. Nothing written here constitutes a promise of any commercial result, return or receipt of building rights. Any action taken in reliance on this article is at the reader’s sole responsibility. Errors and omissions excepted.
