— Pillar guide · Urban renewal

Tama 38 & Pinui Binui: Israeli urban renewal

Tama 38 (תמ״א 38) and Pinui Binui (פינוי בינוי) are Israel's two flagship urban renewal programmes. They let an owner transform an aging apartment into a brand-new property — free or with compensation — in exchange for building rights ceded to the developer.

Properly understood, the operation creates value (often +30 to +60% above original price), improves seismic safety and fully modernises the asset. Poorly negotiated, it exposes owners to years of procedure and undervalued compensation.

This guide covers each programme's principles, standard compensation ratios, timelines, taxation and pitfalls specific to foreign buyers and owners.

Tama 38: reinforcement in place

Tama 38 is a national plan that lets developers add floors, lifts, balconies and parking to an existing building, in exchange for seismic reinforcement of the structure. The original building is not demolished.

The owner receives a renovated apartment (Tama 38/1) or fully rebuilt one (Tama 38/2 — demolish-rebuild). No payment from owner: developer recoups by selling added apartments.

Conditions: building constructed before 1980, agreement of 66% of co-owners (50% since 2020 for some variants), municipal permit. Timeline: 3-5 years on average between agreement and delivery.

Pinui Binui: neighbourhood demolish-rebuild

Pinui Binui is broader: full demolition of an aging block and construction of new towers in its place. The owner receives a free larger new apartment in the new complex.

Standard ratio: 1 old apartment → 1 new apartment 25-50% larger, in the same neighbourhood. Plus temporary rehousing and expense compensation during the 3-4 year construction.

Conditions: 80% of co-owners' agreement (66% since the 2024 reform), urban plan validation (Tab"a), licensed developer. Procedure: 7-10 years on average — long, but significant value created.

Applicable taxation

Major fiscal advantage: ceding building rights to the developer is exempt from Mas Shevach for the owner. Capital gain on the new apartment is only taxed at future resale.

For the developer: full Mas Rechisha on new apartments sold, plus VAT 17%. The original owner pays neither Mas Rechisha nor VAT on their new apartment.

Warning: if buying an apartment already engaged in Tama 38 / Pinui Binui, request ALL signed contracts with developer. The legal status of the ongoing operation determines real property value.

Investing in a Tama 38 / Pinui Binui property

Buying in a candidate building can multiply value in 5-10 years. But risks are real: co-owner opposition, developer bankruptcy, municipal block, multi-year delay.

Mandatory checks before purchase: percentage of co-owners already signed, developer identity and solvency, municipal permit status, existing contracts with developer, bank guarantees (Hok Mecher).

Typical strategy: target buildings already at 50%+ agreement with solid developer and permit in progress — optimal risk/return ratio.

Frequently asked questions — Tama 38 & Pinui Binui

What's the difference between Tama 38 and Pinui Binui?+

Tama 38 reinforces an existing building (with added floors). Pinui Binui fully demolishes and rebuilds a neighbourhood.

Does the owner pay anything?+

No. The developer finances everything and recoups via added apartments or new towers sold. No direct cost to the owner.

How long does it take?+

Tama 38: 3-5 years agreement-delivery. Pinui Binui: 7-10 years, more complex due to full demolition and rehousing.

What agreement percentage is required?+

Tama 38: 66% (sometimes 50%). Pinui Binui: 80% before the 2024 reform, 66% after. A minority opponent no longer systematically blocks.

Can I buy an apartment already engaged?+

Yes — common strategy. But verify existing contracts, developer, and Hok Mecher guarantees before signing.

Summary: leveraging urban renewal

Tama 38 and Pinui Binui are among the best levers for property value creation in Israel — provided you invest in a seriously advanced project with a solid developer.

For an old-building owner in Tel Aviv, Bat Yam or Ramat Gan, ignoring these programmes often means leaving hundreds of thousands of shekels on the table.

— Before committing your building

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