Understanding Real Estate Terms:
Discounted Housing Programs

Dira BeHanacha

דירה בהנחה

Dira BeHanacha - דירה בהנחה - Apartment at a Discount, is Israel’s comprehensive housing initiative, managed by the Misrad HaBinui ve’HaShikun - משרד הבינוי והשיכון - Ministry of Construction and Housing, designed to make homeownership and renting more affordable for first-time buyers and specific groups.

Launched to replace the Mechir Lemishtaken - מחיר למשתכן - Buyer’s Price program, Dira BeHanacha integrates multiple tracks to address the housing shortage through subsidized land for developers and discounted apartments sold via a lottery system. It includes purchase options - Mechir Lemishtaken, Mechir Mufchat - מחיר מופחת - Reduced Price, Mechir Matara - מחיר מטרה - Target Price and long-term rental options - Dira LeHaskir - דירה להשכיר - Rental Housing.

How does it work?

The program subsidizes land for developers, who allocate at least 50–60% of apartments in a project for lottery winners at discounted prices. The remaining units are sold at market rates. Lotteries are held periodically, often with two rounds per year. Winners purchase apartments at reduced prices or access affordable long-term rentals under the Dira LeHaskir program.

Eligibility

To participate, applicants must:

• Be Israeli citizens or permanent residents living in Israel (non-residents are generally ineligible).
• Not have owned more than one-third of an apartment in the last 3 years, nor have rights to apartments under construction or on agricultural land, nor rented under protected tenancy laws.
• Meet one of the following criteria:
  
  • Married couples or common-law partners (no age restriction).
  • Singles, divorcees, or widows aged 35+.
  • Single parents with a minor child in their custody.
  • People with disabilities (aged 21+ in some cases).
  • IDF reservists receive priority, with approximately 20% of apartments allocated to them.
  • If apartments remain unsold, they may be offered to “housing improvers” (those upgrading homes) under the same conditions, though specific timelines are not always detailed.

Geographic Scope

Projects are primarily in the country’s periphery to encourage development in the North and South, with limited options in central areas. The following links provide more general information about communities and current lottery projects.

Discounts and Benefits

Discounts: Vary by track and are updated periodically. Please use them as a general reference only:

• Mechir Matara: Up to 20% or 300,000 NIS off market prices, with some projects offering up to 600,000 NIS.
• Mechir Mufchat: Up to 400,000 NIS in specific peripheral areas.
• Mechir Lemishtaken (remaining projects): Historically offered 25% or 200,000–500,000 NIS discounts.
• Down Payment: For apartments valued up to 1.5 million NIS, only a 10% down payment is required (vs. 25–30% in the open market).
• Grants: Additional grants of up to 40,000 NIS are available in peripheral regions.
• Restrictions: Winners cannot sell apartments for 5 years from receiving the Tofes 4 – טופס ארבע – ownership/occupancy document or 7 years from the lottery date, whichever comes first.

Lottery System

• Lotteries are announced on the Ministry’s website and through the media, with registration periods of 2–6 weeks.
• Applicants can register for up to three cities and all projects within them.
• Results are communicated via email/SMS, with waitlist options. Winners select apartments based on lottery rank.

Advantages

• Affordable apartments significantly below market prices.
• Lower down payment (10% for apartments up to 1.5 million NIS).
• Additional grants in peripheral areas.
• Priority for reservists and diverse eligibility criteria.

Disadvantages

• Delays: Construction can take 2–5 years, with some projects lacking building permits at lottery time.
• Cost Increases: Prices are tied to the construction index, potentially raising costs before possession.
• Low Odds: High demand (e.g., 100,000+ applicants for 6,500 units in 2022) reduces winning chances, especially in central areas.
• Locations: Focus on peripheral areas may not suit all lifestyles.
• Additional Costs: potential legal fees, purchase taxes, and renovations can offset savings.

Step-by-Step Process to Register

• Obtain a Teudat Zakaut – תעודת זכאות – Certificate of Eligibility:

Cost: around 200 NIS (valid for one year, renewing requires a new payment)

• Apply online or in-person via authorized companies (Alonim *2850, Milgam *2310, Maof LeDiyur *9344)
• Processing can take up to 10 days or more
• Research available projects: Review available projects on the Ministry’s lottery website while paying attention to geographic area and number of applicants registered which will impact your odds of winning. Please note that listed prices do not include Ma’am – מע”מ – VAT, so budget accordingly
• Register for Lottery: Sign up for up to three cities via the government portal during the registration period
• Wait for Results: Results are announced via email/SMS within weeks.
• Check Building Permits: Confirm if the project has permits, as delays are common without them
• Secure a Mortgage: Winners may access favorable mortgage terms, especially for apartments under 1.5 million NIS
• Choose Apartment and Sign Contract: Select an apartment based on lottery rank, sign with a deposit (amount varies), and engage a lawyer if necessary. Please note: winning the right to buy an apartment does not obligate you to purchase it and you can still apply again in the future for other lotteries, provided that you have not signed a contract
• Follow Payment Schedule: Typically, 7–20% initially, incremental payments up to 90%, and 10% upon key receipt. Account for taxes and fees

Recommendations

• Visit the government’s main site (Hebrew) for the latest information including, lottery dates, and project details.
• If you are considering entering a lottery in the next few years, to avoid delays you should apply for the eligibility certificate now, even if there is currently no specific lottery that you are interested in
• Research cities in the periphery for better odds of winning and consider your lifestyle needs
• Budget for additional costs (taxes, renovations) to ensure financial feasibility.

Summary

Dira BeHanacha aims to increase housing supply and affordability, particularly for first-time buyers and young families. While it offers more flexibility than the older Mechir Lemishtaken program, it should be noted that the discounts are smaller and the subscription rate tends to be very high.