In all our years of working in real estate, it was understood that owners of property built on land leased from the church through Keren Kayemet L’Yisrael (KKL) could renew the lease automatically upon expiration. There was always the question of how much that renewal would cost, but it was never a doubt that renewing the lease was an option. Today, reality looks much different…
In the 1950’s with the vast influx of new immigrants to the young State of Israel, the KKL brokered 99-year lease agreements with the Greek Orthodox Church on behalf of the Israeli government in order to build on land in the areas of Tabieh, Rechavia and Nayot. Vast swaths of land were leased from the Church including land that now houses the Israel Museum and Knesset. It was understood that these leases would be renewed through KKL when they approached expiration. The KKL had the opportunity to renew these agreements over the past number of years, but for various reasons, they failed each time to follow through. Nevertheless, residents were not concerned because they had the clout of the KKL behind them to negotiate a fair renewal when the time came.
Everything changed in August 2016, when a group of anonymous Jewish investors purchased 500 dunams (over 125 acres) of land that houses 1,100 dwellings in Talbieh and Nayot from the Greek Orthodox Patriarchate. This was the first time that The Church actually sold land in Israel as opposed to leasing it out. This would not necessarily be worrisome were it not for the recent court ruling that land owners have the right to forcefully vacate buildings on their land when the lease ends. This means that owners of apartments on church-leased land no longer have the reassurance that they will be able to renew their lease automatically when it expires (in some cases in as little as 18 years), but rather could lose their homes by the end of the lease agreement. As a result of this instability, owners of apartments on leased land are having trouble selling their homes and banks are refusing to provide mortgages for the few buyers left who would purchase such apartments. Thus it is that we are witnessing a housing crisis in the most upscale neighborhood of Jerusalem.
For the past number of months, hundreds of homeowners have gathered together against the threat of either losing their homes or being forced to pay exorbitant fees to renew the land lease. Under the leadership of local resident (and our client) Irene Grossman, the group has drafted the help of members of Knesset Dudi Amsalem and Rachel Azaria. MK Rachel Azaria has been pushing forward a bill that would have the government purchase the land from the developers and thus protect the rights of the residents. After much publicity and public outcry, two weeks ago, Ayelet Shaked also established a team of government officials who will work with the Assistant Attorney General to find a solution to this crisis within the next two months. In response, the KKL has stated that they are working together with relevant authorities in protecting the rights of the residents.
Time will tell whether the government and KKL follow through on their commitment to protecting these vulnerable residents. Until then, it is advisable to invest in homes on private land and to wait for a swift resolution to this crisis before purchasing lease-land properties. We will continue to update you as the situation evolves.