TAMA 38 in Israel: Rights and Risks for Foreign Apartment Owners

Israel sits on the Syrian-African Rift, a seismically active zone. A 6.2-magnitude earthquake struck the Dead Sea Rift in 1927, destroying much of Nablus and Jericho and killing over 500 people. Israeli seismologists have long warned that a major earthquake along the same fault line is overdue. The problem is that tens of thousands of Israeli apartment buildings constructed between the 1950s and the late 1970s were built to no meaningful seismic standard. They have unreinforced concrete frames, no safe rooms, and no elevators. TAMA 38 was created to fix this, not through government funding, but by letting developers add commercially sellable floors to a building in exchange for strengthening the existing structure at their own cost.

For a foreign national who owns an Israeli apartment (inherited from a parent, bought as an investment, or held from years of living there), a TAMA 38 proposal can arrive as a surprise. You receive a Hebrew-language letter from a developer you've never heard of, describing something that sounds simultaneously beneficial and invasive. This guide explains what TAMA 38 actually involves, what your legal rights are, and what you need to do to protect those rights from outside Israel.

1. What TAMA 38 Is and Why It Exists

TAMA 38 is a national planning policy instrument (formally, National Outline Plan 38, תוכנית מתאר ארצית 38) approved in 2005 and substantially amended in 2010 and 2012. It does not require individual planning approval from the local committee for the added floors or the structural reinforcement work; instead, TAMA 38 grants a blanket planning right to eligible buildings, subject to conditions. This is what makes it attractive to developers: the planning risk that would normally delay a project by years is largely removed.

Several legal instruments combine to make TAMA 38 work:

• The Planning and Building Law 5725-1965 defines the general planning and permit framework within which TAMA 38 operates.
• The Strengthening of Existing Buildings to Withstand Earthquakes Law 5768-2008 (the "Strengthening Law") creates the compulsory participation mechanism that allows a two-thirds majority to bind holdout owners.
• The Real Estate Taxation Law 5723-1963 and specific exemption decisions by the Israel Tax Authority provide the tax benefits that make the economics work.
• The Sale (Apartments)(Assurance of Investments of Apartment Purchasers) Law 5735-1974 governs the bank guarantee requirements that protect owners in the demolition-and-rebuild track.

The programme runs in parallel with Pinuy-Binuy, the full-demolition urban renewal scheme. The two are often confused, but they serve different building stock and offer different owner experiences. TAMA 38 is faster, less disruptive in its main track, and applies to a much wider range of buildings.

2. TAMA 38/1 vs TAMA 38/2: The Two Tracks

Two tracks exist, and they work very differently for apartment owners.

TAMA 38/1 — Strengthening with additions. This is the original and still more common track. The developer reinforces the building's existing structural frame using a technique approved under Israeli Standard SI 413 (the national seismic design standard that has applied to new construction since 1980). Simultaneously, the developer adds new floors (typically two to four new apartments' worth) on top of the existing building. The entire process happens around the existing residents, who remain in their apartments throughout construction. The building stays standing; residents are not displaced.

Owners of existing apartments receive: reinforced walls and columns throughout the building, a new safe room (mamad) added to each apartment, an elevator if the building lacks one, a new balcony or extended balcony, facade renovation, lobby renovation, and sometimes underground parking. All of this is provided by the developer at no cost to existing owners. The developer's return comes from selling the new apartments on the added floors at market prices.

TAMA 38/2 — Demolition and rebuild. Introduced in the 2010 amendments, this track involves demolishing the existing building entirely and constructing a new one in its place, similar in concept to Pinuy-Binuy but on a smaller scale. Existing owners are displaced for the construction period (typically 24 to 42 months), receive a monthly rental stipend to cover alternative accommodation, and receive a new replacement apartment in the rebuilt structure. The replacement apartment is generally larger than the original. This track is more common where the existing structure is genuinely unsafe or where the economics of the site make a full rebuild more attractive to the developer than working around the existing frame.

3. Is Your Building Eligible?

Not every Israeli apartment building qualifies for TAMA 38. Eligibility turns on several conditions that a licensed structural engineer must certify before the Local Planning and Building Committee will accept a permit application.

The principal eligibility criteria are:

• Construction date. The building must have been designed and built without reference to Israeli Standard SI 413. In practice, this means buildings completed before approximately 1980, though some buildings from the early 1980s also qualify if they predate SI 413 adoption in the specific municipality.
• Size threshold. The building must have at least six apartment units, or be at least three storeys in height. Smaller structures generally do not qualify.
• Seismic zone. The building must be located in a seismic risk zone as defined by the National Outline Plan. Israel's seismic risk maps, maintained by the Geological Survey of Israel (Misrad HaEnergya VeHaTashTit), place most of the country (including Tel Aviv, Jerusalem, Haifa, and all the coastal and central areas) in moderate to high seismic risk zones. The Negev and parts of the north are also covered. Very few locations in Israel fall entirely outside the seismic risk classification.
• Structural certificate. A licensed structural engineer must certify that the building was not built to SI 413 standards. This certification is the developer's responsibility and cost, not the owners'.

Eligibility does not mean the project will happen. Even an eligible building can stall if the developer cannot reach the required owner threshold, if the Local Planning and Building Committee imposes conditions the developer cannot satisfy, or if the project is economically unviable because the municipality's height restrictions prevent adding enough floors.

4. The Two-Thirds Majority Rule

This is the aspect of TAMA 38 that most surprises foreign owners: your refusal alone cannot stop the project.

Under the Strengthening Law 5768-2008, once two-thirds (66.67%) of the registered apartment owners in the building have signed the TAMA 38 agreement with the developer, the developer may apply to the District Court for an order compelling the remaining owners to participate. The court's role is not to decide whether TAMA 38 is a good idea or whether the project should proceed. Those questions are settled by the planning authority. The court examines two things: whether the statutory minimum package has been offered to the holdout owners, and whether any holdout has a legally recognized ground for exemption.

Recognized grounds for exemption are narrow. They include:

• A documented serious medical condition preventing any construction disruption (this exemption applies only in TAMA 38/2, where displacement actually occurs)
• An ownership dispute that genuinely puts the owner's title in question
• A demonstrated failure by the developer to offer the statutory minimum package
• Situations where the project would materially worsen the owner's position rather than improve it

What does not work: general reluctance to participate, concern about construction noise or mess, scepticism about the developer's ability to complete the project, or preference for a different developer. Courts have rejected all of these as grounds for blocking compulsory participation orders.

The two-thirds threshold is measured by registered apartment ownership in the Land Registry (Tabu), not by number of occupants or by floor area. Each registered apartment unit counts as one vote, regardless of size. If a single family owns multiple units in the building, each unit counts separately. Ownership disputes (for instance, where an apartment was inherited but the Tabu registration was never updated) can complicate the count and are worth resolving before a TAMA 38 project advances.

5. What Every Owner Receives

The TAMA 38 framework was designed so that existing apartment owners receive tangible improvements at zero cost. The specific package differs between the two tracks.

In TAMA 38/1 (strengthening with additions), every existing apartment owner receives:

• A structurally reinforced building, certified to meet SI 413 seismic standards
• A new safe room (mamad) physically attached to each apartment, adding typically 9 to 12 square metres of living space. The mamad is a reinforced concrete room with a blast-proof steel door and dedicated ventilation
• An elevator, if the building does not already have one
• New balcony or balcony extension of at least 6 square metres per apartment (sometimes more, depending on the project)
• Facade renovation: the building's exterior is entirely replaced
• Lobby and common-area renovation, including new mailboxes and entrance security
• Sometimes: underground parking spaces, although this depends on the site and the developer's economics

Owners remain in their apartments during construction. There is disruption (drilling, jackhammers, scaffolding on the exterior), but no mandatory displacement. Construction typically takes 18 to 36 months from the moment workers arrive on site, depending on the building's size and complexity.

In TAMA 38/2 (demolition and rebuild), every owner additionally receives:

• A monthly rental stipend from the date of key handover until the new apartment is ready for occupancy. The stipend equals the market rent for a comparable apartment in the same neighborhood, typically with a 10 to 20% premium. For a 3-room apartment in Tel Aviv or central metropolitan areas, this commonly runs NIS 6,000 to NIS 11,000 per month in 2026
• Documented moving costs, both for departure from the original apartment and for entry into the replacement apartment
• A replacement apartment in the new building, generally 12 to 25 square metres larger than the original, with a new safe room included
• A bank guarantee covering the full value of the replacement apartment and all advance payments

6. Tax Benefits Under TAMA 38

The Israeli government built substantial tax incentives into TAMA 38 to encourage both developer investment and owner participation. The three most significant benefits for existing apartment owners are:

Betterment levy exemption. Under the Third Addendum to the Planning and Building Law 5725-1965, any planning decision that increases the value of your property normally triggers a hetel hashbacha (betterment levy) charge of 50% of the added value, payable to the Local Planning and Building Committee. TAMA 38 would ordinarily create exactly such a planning gain. Your apartment becomes more valuable because the building is strengthened and receives a safe room, elevator, and balcony. But the law provides a complete exemption from betterment levy for all the improvements delivered to existing owners under TAMA 38. You pay no betterment levy when the project completes.

Capital gains tax treatment. Existing owners in a TAMA 38/1 project are not selling anything; they are receiving additions and improvements. The additions to the apartment (safe room, balcony extension) are treated as additions to the original property for tax purposes. When you eventually sell the apartment, capital gains tax (mas shevach) under the Real Estate Taxation Law 5723-1963 is calculated on the full sale price against your original purchase cost. The TAMA 38 improvements do not increase your taxable cost basis. Non-residents are subject to the standard withholding rules on any eventual sale. In a TAMA 38/2 project, the exchange of the old apartment for the replacement apartment is specifically exempted from mas shevach by the Israel Tax Authority's administrative position, consistent with the policy for Pinuy-Binuy transactions.

Purchase tax on additions. The new safe room and balcony additions created by the TAMA 38 project are added to your apartment's registered area. Normally, any new apartment transaction carries purchase tax (mas rechisha) under the Real Estate Taxation Law. For TAMA 38 additions, purchase tax is waived by Israel Tax Authority administrative instruction: no actual purchase transaction is occurring, since the additions flow from the planning right, not a sale.

7. Developer Obligations and Bank Guarantees

The developer in a TAMA 38 transaction carries a set of obligations that are partly statutory and partly contractual. Understanding the difference matters, because statutory obligations cannot be waived even if you sign an agreement that purports to limit them, while contractual obligations depend on what you actually negotiated.

Statutory obligations in TAMA 38/1:

• Maintain building occupancy throughout construction; residents cannot be evicted or required to vacate
• Repair any damage caused to existing apartments during construction at the developer's cost, without deduction or dispute
• Complete the structural reinforcement work to SI 413 standard and obtain the relevant completion certificates from the Local Planning and Building Committee
• Deliver the mamad to every apartment that the approved plan assigns one to

Bank guarantee in TAMA 38/2: In the demolition-and-rebuild track, the developer must provide a bank guarantee from a recognized Israeli bank before any owner hands over their apartment keys. The guarantee must cover the value of the replacement apartment and all advance payments made under the agreement. Under Section 2 of the Sale (Apartments)(Assurance of Investments) Law 5735-1974, which applies to the replacement apartment as a new construction sale, the guarantee must be updated as construction costs rise. A guarantee that was issued for NIS 900,000 in 2024 but the replacement apartment is now worth NIS 1,400,000 in 2026 leaves a gap that the bank will not cover if the developer becomes insolvent. Insist on an annual update mechanism tied to an independent valuation, not the developer's own assessment.

Timeline obligations: The agreement should specify a completion date and a mechanism for calculating delay penalties. Standard TAMA 38 agreements in 2026 typically provide for a penalty of NIS 3,000 to NIS 7,000 per month of delay in delivering the completed additions. In a TAMA 38/2 project, the rental stipend continues during any construction delay, which provides some protection, but only if the original stipend rate was set correctly in the agreement.

8. Protecting Your Rights as a Foreign Owner

Foreign and non-resident apartment owners have the same legal rights as Israeli residents under TAMA 38. The practical challenge is exercising those rights when you are not physically present in Israel and may not read Hebrew fluently.

Power of attorney. The most important step is preparing a notarized, apostilled power of attorney (yipui koah) that authorizes an Israeli attorney or trusted representative to act on your behalf. The POA should expressly cover: receiving all notices from the developer and the Local Planning and Building Committee; reviewing and signing or refusing the TAMA 38 agreement; negotiating amendments to the agreement; attending owner meetings; commissioning independent engineering inspections of the completed work; and lodging formal complaints or objections on your behalf within statutory deadlines. A generic POA that only covers property transactions may not be sufficient. Have the document drafted specifically for the TAMA 38 context.

Address for notices. Under the Strengthening Law and the standard TAMA 38 agreement, the developer is required to deliver notices to each owner's registered address. If your Tabu registration lists a foreign address, or if you have never updated the building's management records with a current address, critical notices (including the formal offer that triggers your response deadline) may not reach you. A 30-day response window that expires while a notice sits unread at a stale address can cost you the right to negotiate the terms of your participation. Register an Israeli address (your attorney's office address) for all TAMA 38 correspondence.

Independent engineer. In TAMA 38/1, commission an independent licensed structural engineer to inspect the completed structural reinforcement work before you confirm acceptance of the mamad and the building improvements. The developer's engineer certifies the work to the Local Planning and Building Committee, but their certificate covers planning compliance, not the quality of workmanship on your specific apartment additions. An independent inspection, costing NIS 1,500 to NIS 3,500, identifies defects you can require the developer to correct before your acceptance waiver is signed. In TAMA 38/2, the same logic applies to the replacement apartment at handover; a professional snagging inspection protects your rights under the statutory defects warranty.

Inheritance situations. TAMA 38 proposals frequently arrive at apartments that have been inherited but whose Tabu registration has not been updated from the deceased owner's name. An apartment still registered in a deceased parent's name does not count toward the two-thirds threshold until the succession order is obtained and the heirs are registered. But the developer may proceed based on other owners' signatures and later apply to court, at which point unregistered heirs can find themselves without a legal footing to contest the order. Updating the Tabu registration after obtaining a succession order should be treated as urgent when a TAMA 38 project is underway.

Frequently Asked Questions