Quick Answer: TAMA 38 (Tochnit Matar 38) is Israel's National Outline Plan for earthquake protection, enacted under the Planning and Building Law 5725-1965. It grants developers additional building rights in exchange for reinforcing or rebuilding pre-1980 residential buildings. Foreign and diaspora apartment owners in eligible buildings have the right to participate, negotiate individual agreements, and receive bank-guaranteed improvements without traveling to Israel, provided they appoint an Israeli attorney via Power of Attorney. TAMA 38/1 strengthens the existing structure and adds floors; TAMA 38/2 demolishes and rebuilds entirely. Approval thresholds differ between the two tracks. Signing a developer agreement without independent legal advice is one of the most consequential mistakes foreign owners make.

Walk through the older residential districts of Tel Aviv, Holon, Bat Yam, Haifa, or Jerusalem and you will see it repeatedly: scaffolding wrapped around a five-story block built in the 1960s, a crane on the roof, new stairwells being grafted onto the side of a building that looks entirely out of era. That is TAMA 38 in progress.

Israel sits in an active seismic zone. Buildings constructed before 1980 predate the country's current earthquake design standards, and a significant portion of the residential stock in major cities would not hold up in a major seismic event. TAMA 38 is the policy mechanism that creates a financial incentive for developers to fix this, building by building, by granting extra building rights in exchange for seismic reinforcement work done at the developer's expense.

For foreign nationals and diaspora families who own apartments in pre-1980 Israeli buildings, TAMA 38 is simultaneously an opportunity and a legal challenge. The upside is substantial: a larger apartment, an elevator, a new balcony, a parking space, and a meaningful increase in property value, all covered by the developer. The complexity is also real. The developer agreement governs your entitlements in detail, the majority voting rules determine whether you can block a project, and the tax treatment of improvements is specific enough that professional advice is worth the cost.

1. What Is TAMA 38?

TAMA 38 stands for Tochnit Matar Artzit Mispar 38 — National Outline Plan Number 38. It was enacted in 2005 under the Planning and Building Law 5725-1965 and subsequently amended several times. The most significant change came in 2012 with Amendment 3A, which created Track 2 (demolition-rebuild). The plan operates at the national level: all municipalities are subject to it, and a local planning committee cannot opt out of its application.

The mechanism is straightforward. A developer who undertakes earthquake-proofing work on a qualifying building receives a bonus in zachuyot bniya (building rights) from the state: the right to build additional apartments or floors on top of the reinforced or rebuilt building. The developer sells those additional units at market price and uses the proceeds to finance the reinforcement and improvement work. Existing apartment owners receive upgrades and improvements at no direct cost to themselves.

What makes TAMA 38 particularly relevant for foreign owners is its geographic concentration. The program applies most heavily in the coastal cities where diaspora ownership is highest: Tel Aviv, Holon, Bat Yam, Netanya, Ashdod, and Haifa. If you own a pre-1980 apartment anywhere in the greater Tel Aviv area, there is a genuine chance that a developer has already approached your building's vaad bayit (building committee) about a TAMA 38 project.

In Practice — The Authorities Involved: A TAMA 38 application passes through multiple layers. The Local Planning Committee (Va'ada Mekomit) issues the building permit (hiter bniya) and is the primary point of contact for routine TAMA 38/1 projects. For projects that exceed local jurisdiction thresholds or involve higher-density additions, the District Planning Committee (Va'ada Mehoz) must also approve. The national framework is overseen by the National Planning Administration (RAAM — Reshut Hitnon Artzit), which publishes eligibility guidance and building rights allocations. Tel Aviv has its own detailed municipal TAMA 38 policy guidelines — including minimum setback distances from neighboring buildings and per-block height limits — that developers must satisfy on top of the national requirements.

2. Which Buildings Qualify for TAMA 38?

Not every older building in Israel qualifies. Three conditions must all be met.

Age. The building must have received its original building permit before January 1, 1980. This cutoff is fixed in the national plan. Buildings permitted after that date were constructed under structural standards introduced in the late 1970s that followed Israel's adoption of earthquake-resistant design requirements, so the legislature drew the line there.

Structural inadequacy. A licensed structural engineer must prepare a doch handasai (engineering report) confirming that the building does not meet the seismic resistance standard set by Israeli Standard IS-413. Without this report, no local planning committee will accept a TAMA 38 application. The report is prepared at the developer's expense in most cases, but an owner-initiated assessment runs approximately NIS 1,500 to NIS 3,000 for a standard apartment block.

Residential use. TAMA 38 applies to mivney megurim (residential buildings). Commercial buildings, industrial structures, and mixed-use buildings where the residential portion falls below the minimum threshold do not qualify. Some urban mixed-use buildings in central Tel Aviv have qualified where the residential floors independently meet the standard, but this requires a specific legal and engineering determination.

Buildings on Israel Land Authority (Minhal Mekarkin Yisrael) leasehold land are eligible for TAMA 38 in the same way as freehold properties. The ILA's underlying ownership of the land does not prevent a project, but the question of who holds the additional building rights created on ILA land requires separate resolution between the developer and the ILA. This point has generated litigation and should be confirmed during any due diligence before a developer agreement is signed.

In Practice — Checking Your Building's TAMA 38 Status: To find out whether your building already has an active TAMA 38 application or a permit in progress, search the Local Planning Committee's permit register (pinkas haverot bniya) through your municipality's online portal, or submit a written request. The Ministry of Construction and Housing's national building information system also tracks projects that have reached permit stage. If you suspect your building qualifies but have heard nothing from the vaad bayit, a structural engineer can assess eligibility for NIS 1,500 to NIS 3,000. Knowing your status before a developer approaches you puts you in a much better negotiating position.

3. TAMA 38/1 vs. TAMA 38/2: Different Projects, Different Rights

Amendment 3A introduced a second track in 2012. The two tracks differ in scope, construction timeline, disruption to residents, and the specific rights they confer on existing owners.

TAMA 38/1 — Reinforcement and Addition. The developer reinforces the existing building structure while residents remain in their apartments throughout construction. This typically involves installing reinforced concrete cores, strengthening existing walls and slabs, adding a new stairwell and elevator shaft, and overhauling the building's exterior. Owners commonly receive an enlarged apartment — typically 12 to 22 additional square meters — plus an enlarged or new balcony, a parking space, and a storage unit. The developer profits by building new apartments on additional floors added to the top of the reinforced building. Construction under TAMA 38/1 normally runs 18 to 30 months from permit issuance to completion.

TAMA 38/2 — Demolition and Reconstruction. The entire building is demolished and replaced with a new, larger structure. All residents must vacate for the full construction period, which typically runs 3 to 5 years from permit through completion of the new building and apartment handover. Each owner receives a completely new apartment in the rebuilt building, plus a monthly housing allowance while displaced. The new building has more floors and more total units than the original; the developer sells the extra units to cover costs. Residents end up with larger apartments built to current structural and energy standards.

The difference in disruption matters most for diaspora owners who rent their apartments. A TAMA 38/1 project allows existing tenants to stay, though construction is noisy and access to common areas is repeatedly disrupted. A TAMA 38/2 project requires terminating or suspending tenancy agreements for the full construction period — a significant consideration for owners who depend on rental income from the property.

In Practice — Temporary Housing Allowances in TAMA 38/2: When a building undergoes TAMA 38/2, the developer must pay each owner a monthly rent allowance for alternative housing during the construction period. In the Tel Aviv metropolitan area, this allowance runs approximately NIS 5,500 to NIS 9,000 per month for a 3-room apartment and NIS 7,500 to NIS 14,000 for a 4-room apartment (2026 rates). Moving costs — typically NIS 8,000 to NIS 15,000 for two moves out and back in — must also be covered by the developer. Both the monthly allowance amount and a mechanism for adjusting it if construction runs over schedule should be written into the developer agreement before it is signed. For diaspora owners who do not reside in Israel, the housing allowance effectively becomes additional project income, though it is subject to Israeli income tax unless a specific exemption applies.

4. Rights of Apartment Owners in TAMA 38 Buildings

A developer cannot impose a TAMA 38 project on a building unilaterally. Owner consent is required, and the threshold for moving forward varies by track.

TAMA 38/1 voting threshold. A reinforcement project can proceed with a simple majority of apartment owners — more than half of the registered owners in the building. A single holdout cannot block the project once the majority approves. However, every owner, including one who voted against, retains the right to negotiate an individual agreement with the developer covering the specific improvements they will receive.

TAMA 38/2 voting threshold. Demolition-rebuild requires a higher threshold. Municipal policy in Tel Aviv sets this at 66%, while other cities apply thresholds between 66% and 80%. A developer who cannot reach the required threshold may apply to the District Planning Committee, which has authority to compel reluctant owners once the statutory percentage of consenting owners is in place.

Every owner, regardless of how they voted, holds the following rights throughout the process:

  • Right to independent legal advice. You are entitled to your own attorney before you sign. The developer's attorney works for the developer. Many TAMA 38 agreements contain clauses that are standard from the developer's perspective but can be materially improved on behalf of owners during negotiation — particularly on defect warranty periods, delay penalties, bank guarantee specifics, and fit-out standards. The Israeli Bar Association's professional ethics guidelines explicitly prohibit a single attorney from representing both the developer and apartment owners in the same TAMA 38 transaction.
  • Right to a bank guarantee. For any project where you are vacating your apartment or receiving a rebuilt apartment, you are entitled to an arvut bankait (bank guarantee) from a licensed Israeli bank covering the full value of your entitlements. This guarantee is on-demand: you can call it upon developer default without first proving specific financial loss.
  • Right to inspect approved plans. Once a building permit is issued, the approved plans are public documents. Any owner can obtain copies from the Local Planning Committee. The plans will show the exact dimensions of improved or new apartments, elevator positions, parking allocations, and changes to common areas that affect your property.
  • Right to object to the permit. If the Local Planning Committee approved a permit you believe violates TAMA 38's own requirements or the municipality's local planning guidelines, you have 30 days from the date of permit publication to file a written objection with the Va'ada Mehoz (District Planning Committee).
In Practice — Developer Pays Owner Attorney Fees: In a properly structured TAMA 38 project, the developer pays the reasonable legal fees of each apartment owner's attorney as part of project costs. This is standard Israeli practice, not a special concession. Attorney fees for representing an apartment owner through a TAMA 38 transaction run approximately NIS 10,000 to NIS 25,000 depending on project complexity and whether it is Track 1 or Track 2. If a developer tells you that owners must pay their own legal fees, or suggests using the developer's own attorney to save time, this is a significant warning sign. Reject both approaches.

5. What the TAMA 38 Developer Agreement Must Include

The developer agreement (heskem yezam) is the contract between each individual apartment owner and the developer. It determines exactly what you receive, when you receive it, and what happens if the developer fails to deliver. A well-drafted TAMA 38/2 agreement runs 20 to 40 pages and every clause matters.

Specific improvement schedule. For TAMA 38/1: the exact square meterage being added to your apartment, which room is being enlarged, an architectural floor plan drawing, balcony dimensions, parking space location and size, and storage allocation. For TAMA 38/2: the floor plan, area, floor level, orientation, and fit-out specification of your new apartment. Vague descriptions — "approximately 15 square meters will be added" — are not adequate. The improvement must be defined precisely with a plan attached as a schedule to the agreement.

Bank guarantee details. The identity of the issuing bank (must be a licensed Israeli commercial bank: Bank Hapoalim, Bank Leumi, Mizrahi Tefahot, Discount Bank, or First International Bank), the guarantee amount, the trigger conditions for calling it, the expiry date (must extend beyond the expected project completion), and the extension mechanism if construction is delayed. For TAMA 38/2, the guarantee must be issued and physically delivered to your attorney before you vacate your apartment.

Milestones and penalty clauses. A concrete timeline for permit receipt, construction commencement, structural completion, and apartment handover. Financial penalties (pitzuyim musvamim) per day or per month of delay beyond each milestone give the developer a concrete incentive to stay on schedule. Without penalty clauses, a developer who hits financing difficulties or a soft market has no legal pressure to complete on time.

Defect warranty. The agreement should incorporate by reference the statutory warranty periods under the Sale of Apartments Law 5733-1973: one year for cosmetic finishes, two years for plumbing and electrical systems, three years for waterproofing, and seven years for structural defects. Negotiating extended warranties on specific items, such as the roof on a TAMA 38/1 project, is reasonable and commonly accepted.

Betterment levy allocation. The agreement should be explicit about which party bears any betterment levy (hetel hashbacha) imposed by the local authority on the existing owners' apartments. In many municipalities, the levy is waived or reduced for TAMA 38 participants under an arrangement between the developer and the local authority. If it is not waived, it should be the developer's responsibility under the agreement.

In Practice — Bank Guarantee Amounts in TAMA 38/2: The bank guarantee must cover the current market value of the new apartment you are entitled to under the agreement, not the historical cost of your old one. In central Tel Aviv, where a TAMA 38/2 project might replace a 65 sq m, 3-room apartment with a new 90 sq m unit, the guarantee amount should reflect the current market value of the improved apartment — typically NIS 3.5 million to NIS 6 million depending on the neighborhood and floor (2026 values). Developers sometimes issue guarantees at the old apartment's value or at a project budget figure that does not reflect current market conditions. Your attorney must verify the guarantee amount independently, not simply accept the developer's proposed figure. A guarantee that does not cover a comparable market replacement is not a genuine protection.

6. Tax Implications for Apartment Owners

Three distinct tax issues arise for apartment owners in a TAMA 38 project: betterment levy, capital gains tax when you eventually sell, and income tax on the value of improvements received.

Betterment levy. Under the Planning and Building Law 5725-1965, planning decisions that increase property value trigger a hetel hashbacha (betterment levy) of 50% of the value increase, payable to the local authority. When TAMA 38 designation increases the value of existing apartments, this is in principle a taxable planning event. Section 196A of the Planning and Building Law gives municipalities the authority to waive or reduce the betterment levy on existing owners in TAMA 38 projects, and many municipalities have exercised this authority through specific arrangements with developers. Whether the levy is waived in your specific municipality should be confirmed before you sign the developer agreement.

Capital gains tax when you sell. The improvements you receive through TAMA 38 add to the value of your apartment and therefore to the taxable capital gain when you eventually sell. Section 49H of the Real Estate Taxation Law 5723-1963 provides specific capital gains exemptions for sales of TAMA 38-improved apartments. The exemption applies to the component of the gain attributable to the TAMA 38 improvements, subject to conditions that include a holding period after project completion and a requirement that the seller owned the apartment at the time of the TAMA 38 project.

For non-resident owners, who already pay mas shevach at 25% on the real gain with no single-apartment exemption, the Section 49H exemption can be a meaningful reduction in the eventual tax bill. But the exemption conditions for non-residents differ from those applicable to Israeli residents. A written tax opinion before signing the developer agreement is worth the cost.

Income tax on improvements received. The Israeli Tax Authority's established position is that apartment owners do not receive a taxable income event when TAMA 38 improvements are delivered. The tax event occurs at sale. If a developer proposes cash payments to owners — beyond the housing allowance and standard in-kind improvements — those payments may be treated as taxable income in the year received, which changes the tax planning calculus entirely.

In Practice — Section 49H Tax Planning for Non-Residents: Under Section 49H of the Real Estate Taxation Law 5723-1963, an apartment owner who received improvements through a TAMA 38 project can claim a partial capital gains exemption when selling, subject to a 4-year holding period from completion of the TAMA 38 agreement. For non-residents already facing mas shevach at 25% without a zero-rated band, this exemption can reduce the taxable base on the improvement portion of the gain. However, the exemption requires a formal election in the capital gains declaration at time of sale — it is not applied automatically. US citizen owners face an additional layer: the IRS and the ITA take different positions on when TAMA 38 improvements become taxable income. A tax attorney with dual Israeli-US expertise should review your situation before the developer agreement is signed, not after.

7. How Foreign and Diaspora Owners Participate from Abroad

TAMA 38 developers deal routinely with apartment owners based in the US, UK, France, Australia, and elsewhere. The process is entirely manageable remotely, but specific steps require advance planning.

Power of Attorney. An Israeli attorney can be authorized via yefiuy koah (Power of Attorney) to negotiate the developer agreement, attend and vote at building committee meetings, sign the developer agreement, handle bank guarantee claims, and manage the handover process. The POA must be: (a) drafted specifically to cover TAMA 38 and real estate transactions; (b) signed before a notary in your country of residence; (c) apostilled under the Hague Apostille Convention, to which Israel has been a party since 1978; and (d) accompanied by a certified Hebrew translation. The complete package should reach your Israeli attorney's office at least two weeks before any action is required of them.

Building committee meetings. TAMA 38 decisions are made at a general assembly of owners called by the vaad bayit. If you cannot attend, your attorney can vote on your behalf under the POA. Minutes of a properly convened meeting with a quorum are legally binding on all owners, including those who did not attend. Missing the meeting entirely does not protect you from the project proceeding — your absence reduces the overall turnout but does not count as a negative vote.

Apartment inspection and handover. When the improved apartment (TAMA 38/1) or new apartment (TAMA 38/2) is ready for handover, a defect inspection (bdikat likuyim) must take place before you or your attorney signs the handover protocol. Defects identified at inspection are repaired at the developer's expense under the statutory warranty; defects discovered after the protocol is signed are significantly harder to pursue. Diaspora owners who cannot attend in person often appoint an independent building inspector (bokan bniya) to conduct the physical inspection alongside their attorney. Inspector fees run approximately NIS 1,500 to NIS 3,500 for a standard apartment — a modest cost relative to what is at stake.

In Practice — POA Preparation Timeline: Foreign owners who receive notice that their building is entering a TAMA 38 process should initiate POA preparation immediately, without waiting to see whether the project will actually proceed. Preparing a valid POA in the US, Australia, or Canada involves scheduling a notary appointment (which may have a waiting period), obtaining an apostille from the relevant state or federal authority (1 to 4 weeks depending on jurisdiction), arranging a certified Hebrew translation, and shipping the original document to Israel — all of which adds up to 4 to 8 weeks in total. Developer agreements sometimes have short signing windows, and missing a deadline while other owners have already signed puts you in a weaker position. The cost of preparing a TAMA 38-specific POA is typically NIS 500 to NIS 1,500 in attorney fees plus translation and apostille costs of approximately USD 150 to USD 400 depending on your country.

8. What Happens When an Owner Refuses to Sign

TAMA 38/1 does not require unanimous consent. Once a majority of owners approves the project and signs developer agreements, the developer can proceed under the building permit. A holdout owner cannot legally prevent the contractor from working in common areas, reinforcing the structure, or building additional floors — all of which are authorized by the planning permit issued to the developer by the Local Planning Committee.

What the holdout loses is access to the improvement package. A TAMA 38/1 project will reinforce your building whether or not you sign, but if you refuse to engage, you will not receive the apartment enlargement, balcony, parking space, or storage that other owners negotiate into their individual agreements. The developer has no legal obligation to offer these improvements to an owner who declines to negotiate. Israeli courts have consistently upheld this outcome, including in Tel Aviv District Court decisions through the early 2020s, holding that a single owner cannot claim the right to stop lawfully permitted reinforcement work simply because they did not consent to the developer's specific terms.

TAMA 38/2 is more complex. Because it involves vacating the building and requires a higher approval threshold, a smaller minority can create genuine logistical problems. An owner who refuses to vacate creates a practical obstacle for the developer. Courts can compel participation in TAMA 38/2 projects once the statutory majority is reached, but the enforcement process requires a District Planning Committee application that often adds 6 to 12 months to the overall project timeline.

Some diaspora owners use the holdout position as a negotiating tactic to extract better terms from the developer — a larger apartment addition, upgraded fit-out, or more favorable penalty clauses. This is legally permissible and commercially common, provided there is a genuine dispute about the terms rather than pure obstruction. Courts have not treated it as bad faith when the holdout owner has a real objection to what is being offered.

Holding out indefinitely without a clear negotiating objective, however, carries real risk. Other owners who have signed are entitled to the improvements they negotiated. A developer who has building permits and signed agreements covering 80 or 90 percent of owners has both the legal authority and the commercial incentive to proceed around you. If the project continues without your participation in TAMA 38/1, you will live with all of the construction noise and disruption while receiving none of the negotiated benefits.

In Practice — Re-entry After an Initial Refusal: It is not uncommon for a diaspora owner to decline engagement when a TAMA 38 project is first proposed, then change their mind after realizing the project will proceed without them. Developers are generally willing to include a late-signing owner into the agreement, but the improvement terms on offer after the majority has already signed are typically less favorable than what the earlier signatories received. The developer may offer a smaller apartment addition, fewer building amenities, or weaker penalty protections. Re-entering the process also requires your attorney to review an agreement that was drafted without your input — which is a more difficult position. Engaging promptly, even to negotiate, is almost always the better path for foreign owners who want to protect their interests.

For diaspora owners who find the TAMA 38 process difficult to manage from abroad, the temptation is simply to ignore correspondence from the vaad bayit and wait for the project to resolve itself. This is a costly strategy. If TAMA 38/2 demolition is involved, someone will eventually need your signature before the building can be torn down, and by that point you will have lost the leverage that comes from engaging early. The vaad bayit's letters, even when they arrive in Hebrew and feel bureaucratically impenetrable, are worth addressing promptly through an Israeli attorney.