Netanya Blocks Illegally Split Building From Urban Renewal Project
The Netanya Municipality rejected the inclusion of an illegally split building with 19 units into an urban renewal project, as permits existed for only eight apartments, rendering compensation economically unviable.
The Netanya Municipality has informed the developer of an urban renewal project that a building where only eight out of 19 apartments were legally permitted cannot be included in the initiative, as the remaining units are the result of illegal splitting. The municipality explained that its policy calculates compensation for residents based on the legally authorized area. Providing compensation for all 19 apartments would render the project economically unviable, potentially stalling it for years or even derailing it completely.
The project in question is located on Remez and Brodzky streets in central Netanya and is being advanced by developer Herzl Ben David. The split building is an old four-story structure originally comprising eight apartments, but over the years, the units were divided, and it currently houses 19 apartments owned by 19 different individuals. In 2020, the developer began advancing the project, and in 2022, the municipality recommended adding two buildings on Brodzky Street and the building on Remez Street to the complex.
However, complications arose when the developer reviewed the building permits and rights for all structures, discovering that the permit for the Remez building covered only eight apartments, meaning 11 additional units were split without authorization. Furthermore, the building is not registered in the Condominium Register, meaning legally it is not recognized as a shared building divided into sub-units, but rather as a single entity where each owner holds a fractional share (mushaa).
According to Netanya's compensation policy, the maximum compensation for a resident in an urban renewal project is calculated based on existing space, plus a 12-square-meter addition and a 12-square-meter balcony. While the apartment owners initially wanted to join the project due to the building's poor condition, both the developer and the municipality realized it would be impossible to compensate 19 owners when only eight units were built with permits. The project could not absorb the extra apartments economically, and keeping the building would also spark opposition from other residents in the complex over potential delays.
In March 2024, the municipality informed the developer that the irregular building must be excluded from the project. The municipality examined alternative solutions, such as strengthening the building and transferring rights from another complex, or advancing a standalone zoning plan for reinforcing the structure, adding safe rooms (mamad), and building two additional floors. However, these directions did not progress, and in late 2025, the apartment owners filed a petition with the Central District Court.
The owners argued that the illegal splitting was done in the past by others, not them, and that leaving them in an old, unfortified building violates their rights and safety. The municipality countered that the petition was premature since the planning process had not been exhausted. The developer stated that following the municipality's directive, he invested significant resources in redesigning the project and remains committed to 57 other apartment owners.
The Exception in the Split Apartments Market
Apartment splitting is not a new phenomenon, allowing investment property owners to dramatically increase rental income and yields. Unlike this case, where each apartment is owned separately, in many split apartments across Israel, the person who performed the split owns the entire property, making it easier to reach an agreement with a developer. Another unusual aspect is the sheer number of split units. While one or two split apartments in a building can often be resolved through mutual concessions, here there are 11 units beyond those in the original permit.
Judge Abbas Assi dismissed the apartment owners' demand to rejoin the project, writing that while the municipality initially sought to include the building, it was at a preliminary stage before analyzing building rights.
"A change of position following a professional factual clarification is not in itself a flawed zig-zag," the judge wrote, adding that "granting full compensation for units not built with a permit could increase the project's density and required building rights, harm its economic viability, or transfer the cost to the developer and other apartment owners."
The judge also noted that precedents dictate structures built without permits have no right to urban renewal incentives. Regarding the residents' concerns over the building's dilapidated state, the judge stated that while these claims are serious, "they do not grant the petitioners the right to force the building's inclusion into a specific project, especially where professionals believe the inclusion could derail the entire project."
The apartment owners were represented by Adv. Ofer Shachal, the Netanya Municipality by Adv. Avi Leham, and developer Ben David by Adv. Limor Almani.
