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Can I claim compensation in Israel if a new planning scheme reduces my property’s value?

Yes. Section 197 of the Planning and Building Law 5725-1965 lets the owner of land inside or bordering the area of a new plan claim compensation from the local planning committee where the plan itself reduces the property’s value, even though no land is taken. The claim must be filed within three years of the day the plan came into force, and the Interior Minister may extend that period for good cause. Section 200 then allows the committee to refuse payment where the injury does not exceed reasonable limits and it would be fair not to compensate. Foreign owners have the same standing as Israeli residents, and the deadline runs whether or not anyone notified them personally.

Section 197 covers what planners call injurious affection. A rezoning that permits a highway, a tower block or an industrial use next door can cut an apartment’s market value without touching its title, and Israeli law treats that loss as compensable. The claim goes to the local planning and building committee whose area the plan covers, supported by a licensed appraiser’s report comparing value immediately before and immediately after the plan took effect. If the committee rejects the claim or invokes Section 200, the owner appeals to the Appeals Committee for Compensation and Betterment Levy, and from there to the District Court sitting in administrative matters. Owners can also object to a plan while it is still on deposit, well before any building permit is issued under it.

The three-year clock is the trap for owners abroad. Plans are published in the official gazette and in Hebrew-language newspapers rather than mailed to each owner, so a non-resident can lose the entire window while a tenant or property manager says nothing. Two habits protect you: ask an Israeli lawyer to run a periodic planning search on the block and parcel numbers, and register a current address with the local committee. Note also the mirror image of Section 197. Where a plan raises value instead of cutting it, the same committee charges a betterment levy of 50 percent of the uplift when you sell or build, so owners frequently argue the two mechanisms together.

⚖ In Practice
  • Governing law: Section 197, Planning and Building Law 5725-1965; grounds for refusal in Section 200
  • Competent authority: the local planning and building committee (Vaada Mekomit LeTichnun U’Bniya); appeals to the Appeals Committee for Compensation and Betterment Levy
  • Deadline: three years from the date the plan came into force, extendable by the Interior Minister for good cause
  • Evidence required: a valuation report from a licensed Israeli appraiser (shamai mekarke’in) comparing value before and after the plan; appraiser fees commonly run NIS 5,000 to NIS 15,000 (2026)
  • Timeline: contested Section 197 files routinely take two to four years through the committee and the appeals committee
  • Mirror levy: a plan that increases value triggers a betterment levy of 50 percent of the uplift, payable on sale or on receiving a building permit

From the full guide: Building Permits in Israel: A Guide for Foreign Property Owners

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Get a Free Consultation with Adv. Eli ShimonyPrepared under the direction of Adv. Eli Shimony, Eli Shimony Law Office · Editorial policy

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