One of the areas our firm deals with is the administrative-public field, including local government, and within this framework, our firm accompanies local authorities in all areas of their activities. One of the issues currently occupying local authorities, especially large cities, is locating apartment splitters operating contrary to planning and building laws, and sometimes also contrary to laws concerning safety and sanitation. The splitting of apartments also causes an overload on plumbing, water, and sewage infrastructures, as well as on parking spaces.
In light of the severe shortage of apartments for rent and the cost of renting apartments, many apartment owners decided to pitch in and assist with the housing distress by splitting housing units they own and dividing them into independent units, so that each renovated unit is rented out as a separate housing unit, a business that has become one of the highest yielding in the real estate sector. Thus, a small apartment is split into two or three apartments with one lobby, which together yield a much higher rent. Such splitting requires by law building permits from the local authority's planning and building committee as well as payment of a betterment levy and fees, requirements that reduce the economic viability and therefore, apartment owners prefer to rely on a forced interpretation that this is an internal renovation that does not require the intervention of the authorities and take a risk in exchange for the high return from it.
One of the criteria assisting in distinguishing between an internal change as meant in Section 145(a)(2) of the Planning and Building Law, 1965, and an independent unit defined as an "apartment" requiring a permit, is the independent existence of the units. In this regard, the Court for Local Affairs in Tel Aviv raised the deterrence bar this month by ruling that an apartment owner on Ben Gurion Boulevard in Tel Aviv must pay an increased fine of 256 thousand ILS, which includes a fine of 150 thousand ILS for splitting, an additional fine of 70 thousand ILS for a betterment levy and fees, as well as an additional 26 thousand ILS as a guarantee not to commit planning and building offenses in the coming two years. The court further determined that the accused must return his apartment, split into three units, to its original state, since it is an apartment with a size of 42 square meters that was split into no less than three separate units without a permit. The court rejected the accused's claims that this was an internal change and found that each of the units met the four tests: the first - the degree of completeness of each of the units, the second - whether basic conditions exist that allow housing, the third - separate water and electricity connections, and the fourth - the designation of each of the housing units.
Splitting apartments contrary to the municipal building plan and without a permit is a criminal offense under the Planning and Building Law, for which local authorities have not yet determined enforcement measures, which are problematic since today local authorities rely mainly on hearsay information transferred to the authority by neighbors when the motivating interest for informing is, usually, an overload on infrastructures or parking or (according to human nature) jealousy of the neighbors' income. Today, local authorities do not have effective tools to eradicate the phenomenon other than deterrent court rulings and also by reinforcing inspection teams whose role is to serve as a kind of "enforcement police" to locate the split apartments.
It is important to note that the issue of planning and building is extremely complex and that a person purchasing an apartment without a permit (such as a split apartment) will be criminally liable even if they were not the one who split the apartment. Therefore, it is important, prior to purchasing split apartments for investment purposes or prior to building separate units, to consult with a lawyer who is an expert in the field of planning and building in local authorities.