Quick Answer: Approximately 93% of land in Israel is state-owned and administered by the Israel Land Authority (Reshut Mekarke'i Yisrael, RMY). When you buy a residential apartment in Israel, you almost certainly buy a long-term leasehold interest, a chakira of 49 or 98 years, not freehold ownership of the land. This is legally binding, fully mortgageable, and freely saleable, but it is not the same as owning the underlying land outright. Foreign buyers routinely sign contracts without grasping this distinction, and sometimes the difference matters a great deal.

Most foreign buyers assume Israeli property works like the US, UK, or most of Europe, where buying an apartment means acquiring the land under it. It does not. Israeli land law has a constitutional prohibition on selling state-owned land that has been in place since 1960, and it shapes almost every property transaction in the country. This is not a technicality you can leave to your lawyer to sort out quietly. It directly affects what you can do with the property, how long your rights last, what converting to outright ownership costs, and whether you can buy certain properties at all.

For most everyday purposes, a long-term ILA leasehold works just like ownership. You can live in the property, rent it out, sell it, mortgage it, or pass it to your heirs without any meaningful difference from freehold. Israeli banks lend on it the same way, and buyers pay the same Mas Rechisha purchase tax. But when the details surface, such as a lease nearing renewal, a capitalization fee, or a restriction on foreign buyers, not understanding the structure costs real money.

1. Why Most Israeli Land Is Leasehold

The legal source is Basic Law: Israel Lands 5720-1960 (*Chok Yesod: Mekarke'ei Yisrael*), a constitutional statute that prohibits the transfer of ownership — by sale, gift, or any other means — of land owned by the State of Israel, the Development Authority (*Rashut HaPituach*), or the Jewish National Fund (*Keren Kayemet LeYisrael*, KKL-JNF). Section 1 of the Basic Law states this prohibition in absolute terms.

These three bodies collectively own approximately 93% of Israel's total land area. Their holdings cannot be privatized. They can only be leased, for fixed periods, under agreements managed by the RMY. The structure was a deliberate policy choice at Israel's founding, rooted in Zionist land-redemption ideology and aimed at preventing large-scale land sales to private or foreign interests.

The remaining approximately 7% of Israeli land is private freehold (*ba'alut penimit*), typically land that was privately owned before the State was established in 1948 and held through successive generations. If you are buying private freehold, the Tabu extract will show a private individual or company as the registered land owner, not the State, the Development Authority, or KKL-JNF.

In Practice — The Basic Law Is Constitutional: Basic Law: Israel Lands 5720-1960 sits at the top of Israel's legal hierarchy. No ordinary legislation and no private contract can override it. Any agreement that purports to transfer ownership of state land is void ab initio under Section 1. This is why Israeli property transactions involving state land are always structured as lease assignments, never as outright title transfers. Your purchase agreement (*chozeh mechira*) will assign the existing leasehold interest to you, registered through the Israel Land Registry (Tabu, *Rasham HaMekarkein*), under the auspices of the RMY.

2. How the Israel Land Authority Works

The Israel Land Authority (Reshut Mekarke'i Yisrael, RMY) is the government body responsible for managing all state-owned land. Established under the Israel Land Administration Law 5720-1960 and restructured under the Israel Land Authority Law 5769-2009, the RMY handles allocations, leases, capitalization requests, and enforcement across the country from offices in Jerusalem, Tel Aviv, Haifa, Beersheba, and Nazareth.

The RMY rarely appears in a routine apartment transaction. By the time you buy a resale apartment, the RMY granted the original lease to the developer or first buyer decades ago. You are buying the assignment of that existing lease. The three moments where you will actually encounter the RMY are:

  • Consent to assignment: For certain older lease types, transferring the leasehold to a new buyer requires RMY approval. Most modern leases include a clause granting automatic consent to resale, but older agreements (particularly for 49-year leases granted before 1990) may require a formal application and a fee.
  • Capitalization: If you want to convert from leasehold to freehold (see Section 5 below), the application goes to the relevant RMY district office.
  • New direct allocations: If you are buying a new-build apartment directly from a developer on state land, the original lease grant from the RMY to the developer is part of the transaction chain your attorney must review.
In Practice — RMY Assignment Fees: Under RMY Decision 1301 (updated 2024), the assignment fee for residential property sold between private parties is generally zero for properties that have already been capitalized or where the original lease included a full transfer right. For older unresolved leasehold interests — particularly agricultural land or plots where the lease predates the 1965 policy shift — an assignment fee of 0.5% to 2% of the assessed land value may apply. Your attorney should obtain an RMY printout (pirut meida) for the specific plot before you sign to confirm whether an assignment fee applies. Processing time for RMY consent, if needed, is typically 30 to 60 days.

3. 49-Year vs. 98-Year Chakira

The standard ILA ground lease is called a *chakira* (literally: inquiry or lease). Two principal terms exist in the residential market:

49-year lease

Common for properties built and first leased before the mid-1970s. The term runs from the original grant date, often 1960, 1965, or 1968, meaning some of these leases are now in their final decades or have recently reached their nominal expiry. The RMY does not evict holders of expired 49-year leases; it offers renewal, usually at current market-rate capitalization. Israel's courts have consistently held that leaseholders retain possession rights even after nominal expiry while renewal is being arranged. That said, properties in this situation can carry a cloud on title that makes banks cautious and buyers hesitant. Always check the remaining term before signing anything.

98-year lease

The modern standard. New-build apartments on state land since roughly the 1980s and 1990s are typically granted on 98-year terms. For most foreign buyers looking at resale apartments in Tel Aviv, Jerusalem, or Haifa, the remaining lease term on a 98-year lease granted in 1990 is still over 60 years, well within the range that banks treat as fully mortgageable without any adjustment.

Perpetual Lease (*Chakira Netzachit*)

Since the 2009 Israel Land Authority Law reform, new residential leases on state land can be granted as perpetual leases with no fixed end date. The RMY now issues these by default for new allocations, removing the renewal concern entirely. Properties under perpetual lease are registered accordingly in the Tabu.

In Practice — Bank Lending Thresholds: Under Bank of Israel Regulation 451 (Proper Banking Conduct Regulations), Israeli mortgage lenders assess the remaining lease term as part of their collateral evaluation. As a practical matter, all four major Israeli banks (Bank Hapoalim, Bank Leumi, Bank Mizrahi Tefahot, Discount Bank) lend on ILA leasehold with at least 40 years remaining on standard non-resident LTV terms (maximum 50% LTV). Properties with fewer than 30 years remaining on the lease face significant lending restrictions and most banks will not mortgage them without capitalization or RMY renewal documentation first. If the Tabu shows a short remaining term, factor in capitalization cost as part of your purchase budget.

4. What You Actually Own When You Buy

When you sign a purchase agreement for a Tel Aviv apartment on ILA land, you are buying:

  • The assignment of the existing leasehold interest (*zekhut chakira*) in the apartment and your proportional share of the building common areas
  • Full rights to occupy, renovate, rent out, sub-let (subject to any lease restrictions), mortgage, and sell the property for the duration of the lease
  • The right to pass the leasehold to your heirs under Israel's Inheritance Law 5725-1965
  • Registration in the Tabu as the lessee of record, which is the same registry that records freehold ownership

What you are not buying is the land itself. The land owner on the Tabu extract remains the State of Israel, the Development Authority, or KKL-JNF, depending on which body originally held that parcel. Your interest sits above theirs in the Tabu as a registered leasehold right.

For condominiums (*vadaim bate*), the relevant law is the Land Law 5729-1969 (*Chok HaMekarkein*), specifically Part D on Condominiums (*Bayit Meshutaf*). Your apartment is registered as a separate ownership unit (*yechida nafsit*) within the condominium, with its share of common property (*recho mushav*). That registration looks the same whether the land below is freehold or leasehold.

In daily life, the structure is invisible. You pay Arnona to the municipality, water bills to the local authority, and vaad bayit fees to the building committee, just like any Israeli property owner. The leasehold only surfaces when you try to capitalize, hit a lease renewal issue, or are a non-Jewish foreign buyer bumping into an allocation restriction.

5. Capitalization: Converting Leasehold to Freehold

Capitalization (*hiun* or *ba'alut*) is the formal process of converting a leasehold into full private ownership by paying the RMY a lump sum. Once capitalized, the land owner on your Tabu extract changes from the State to you, and Basic Law: Israel Lands no longer applies to that parcel. You own it outright in perpetuity.

Who can capitalize

Any leaseholder who qualifies to hold the lease can apply, including foreign nationals eligible to hold the leasehold. Capitalization is voluntary. Nobody requires you to do it.

What capitalization costs

Fees are set by the Israel Land Council (*Minhelet Mekarke'i Yisrael*) and published in RMY tariff schedules. The fee is a percentage of the land's assessed value, not the apartment's total market value, just the underlying land component. Typical residential figures for 2026:

  • Urban apartment with over 50 years remaining: approximately 3.5% to 5.5% of the assessed land value, which usually works out to 1.5% to 3% of the apartment's total market value
  • Short lease remaining (under 30 years): higher percentage, since the land component represents more of the total value as the lease shortens
  • New perpetual leases under the 2009 reform: discounted rates apply in many districts

On a NIS 3.5 million Tel Aviv apartment where the land is assessed at NIS 800,000, capitalization runs NIS 28,000 to NIS 44,000. The RMY publishes a fee calculator on its website, and your attorney can get a binding quote from the relevant district office before you commit.

In Practice — When Capitalization Is Worth It: Most Israeli apartment buyers do not capitalize. The practical benefits of freehold over leasehold are narrow for a 98-year lease with 70 years remaining. Capitalization becomes more valuable in three situations: (1) the lease has fewer than 40 years remaining and you want to preserve full mortgage access; (2) you are planning a significant improvement or subdivision and want to avoid any RMY consent requirement; (3) you are a foreign buyer who has obtained RMY consent to hold the leasehold and wants to simplify your title for future sale. The application goes to the relevant RMY district office; the RMY targets a 90-day processing period for residential applications under its 2024 service standards, though complex cases take longer. The capitalization is then registered at the Tabu, with a registration fee of approximately NIS 700 to NIS 3,500 depending on the property value.

6. Foreign buyer restrictions on ILA land

This is the part most foreign buyers miss, and it can determine whether you can buy a specific property at all.

Under Israel Land Council Decision 1 (*Hachlata Mispar 1*), which dates to 1965 and has been periodically updated, allocation of state land, including the original grant of a leasehold interest, is limited to Israeli citizens, permanent residents, and those eligible for citizenship under the Law of Return (Jews, their children, grandchildren, and the spouses of all three groups). Non-Jewish foreigners who do not qualify under the Law of Return cannot receive a new lease allocation directly from the RMY.

The restriction sounds broader than it is, for one reason that matters a lot in practice: resale transactions are not new allocations. When you buy an existing apartment, you are purchasing the assignment of a lease that was already granted to someone else (the developer, the original buyer, or a previous owner). That assignment is not governed by Decision 1's allocation rules the same way an original grant is. In practice, tens of thousands of non-Jewish foreign nationals own apartments on ILA leasehold land through resale purchases.

Where the restriction bites hardest:

  • New direct allocations from the RMY: buying land directly from the RMY or in a government-subsidized lottery (*mechir lamishtaken*, affordable housing lottery) requires eligibility under the Law of Return
  • Agricultural and moshav land: leases for agricultural plots and cooperative settlements (moshavim, kibbutzim) are subject to additional eligibility requirements that effectively exclude non-Jewish foreign nationals entirely
  • Some older lease transfer clauses: certain pre-1990 leases include explicit transfer restrictions requiring the RMY to verify the new leaseholder's eligibility; in these cases a non-Jewish foreign buyer may be refused registration
In Practice — Pre-Purchase RMY Eligibility Check: If you are a non-Jewish foreign national and the property you intend to buy has an older lease with a transfer eligibility clause, or if it involves any form of direct RMY allocation, your attorney should submit a formal eligibility enquiry (she'elat zechut) to the relevant RMY district office before you sign the purchase agreement. The RMY responds within 21 to 30 days with confirmation of whether the transfer can proceed. Buying without this check and then being refused registration at the Tabu creates a serious and expensive legal problem that your purchase contract may not adequately protect you from. The eligibility check costs nothing and is standard practice for experienced Israeli real estate attorneys acting for foreign buyers.

7. Verifying land status via the Tabu

Every Israeli property that has gone through land registration (*hisdarut*) is recorded in the Israel Land Registry, called the Tabu (*Rasham HaMekarkein*). It is the definitive source for land ownership, lease status, and encumbrances. When in doubt about any property, the Tabu extract is where you start.

What a Tabu extract shows

A standard Tabu extract (*nesach Tabu*) for an apartment lists:

  • The registered land owner — if this shows the State, Development Authority, or KKL-JNF, the land is ILA leasehold
  • The registered leaseholder — the current owner of the leasehold interest (this will be the seller in a purchase transaction)
  • The lease term — 49 years, 98 years, or perpetual, with the start date
  • Mortgages (*mishkanta*) registered against the property
  • Cautions (*hatara*) — third-party claims or purchase agreement registrations
  • Easements and annotations (*harshot* and *he'arot*)

How to get a Tabu extract

Extracts are available online through the Ministry of Justice's land registry portal (*moj.gov.il*) for approximately NIS 55. You need the parcel number (*gush* and *helka*) for the specific plot, which your agent or the seller's attorney can provide. Your own attorney will pull this as a routine first step in due diligence. Do not rely on a copy the seller hands you. Order a fresh one directly from the registry.

Properties not yet in the Tabu

Not every Israeli property has completed land registration. Older properties, particularly in Arab towns, moshavim, and some development areas, may be registered in the Land Settlement Register (*Pinkas Beit Mishpat*) or recorded only in the RMY's internal database. Buying unregistered property involves different due diligence and greater legal complexity. Your attorney should confirm the registration status of any property before you proceed.

In Practice — Due Diligence Checklist for ILA Property: Before signing any purchase agreement on Israeli property, your attorney should verify: (1) current Tabu extract showing land owner, registered leaseholder, and remaining lease term; (2) RMY printout confirming lease type, any consent requirements, and outstanding obligations; (3) whether the lease requires capitalization before transfer or includes a transfer-right clause covering the buyer; (4) if you are non-Jewish, whether the specific lease type permits transfer to a foreign buyer without RMY pre-approval; (5) municipal records (Arnona file) confirming the registered use matches the property's actual condition. This checklist is standard practice and a professional Israeli real estate attorney should complete it within 5 to 7 business days of being instructed.

Frequently Asked Questions

Non-Jewish foreigners are generally restricted from receiving new ILA lease allocations under Israel Land Council Decision 1, which reserves original state land grants to Israeli citizens and those eligible under the Law of Return. However, they can purchase an existing apartment on ILA land from another private party by buying an assignment of the existing lease — which is how the vast majority of resale apartment transactions work in practice. The restriction applies to new allocations directly from the state, not to resale transactions. Your attorney should confirm the lease terms and whether pre-approval is needed for your specific property.

Both are long-term ground leases (chakira) granted by the Israel Land Authority. Older properties built before the 1970s typically carry 49-year leases from the original grant date. Newer developments are usually on 98-year terms. From a buyer's perspective the practical difference is small because both automatically renew in most cases, but a 49-year lease that started in 1965 has only a handful of years left on its nominal term, which may require renewal documentation and affect your mortgage options. Always check the remaining term on the Tabu extract before signing.

Capitalization (hiun) converts an ILA leasehold into full freehold ownership. The RMY charges a fee equal to roughly 3.5% to 5.5% of the assessed land value — typically around 1.5% to 3% of the apartment's total market value. On a NIS 3.5 million apartment this might be NIS 52,000 to NIS 105,000. Capitalization is voluntary; most buyers do not capitalize because the practical difference for a long-term lease is minimal and banks lend equally on leasehold. It becomes relevant when the lease is approaching expiry or you want to eliminate any RMY involvement entirely.

No — for standard residential leases with at least 40 years remaining, Israeli banks lend on ILA leasehold exactly as they do on freehold, using the same LTV limits and interest tracks. Non-residents can borrow up to 50% of the assessed value. The mortgage is registered as a charge on your leasehold interest at the Tabu. Properties with fewer than 30 years remaining face lending restrictions at most banks; for those, capitalization before purchase is advisable.

Order a Tabu extract (nesach Tabu) from the Israel Land Registry at approximately NIS 55 per extract. If the registered land owner is the State of Israel, the Development Authority, or KKL-JNF, the property is ILA leasehold. If the registered land owner is a private individual or company, it is private freehold. Your attorney orders this as a standard first step in any property due diligence — never rely on a copy provided by the seller or agent.

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