What off-plan buying (dira al ha-niyar) is, and who it suits
Israelis call it “dira al ha-niyar”, literally an “apartment on paper”. You sign a contract with a developer (kablan) for a home that does not exist yet, or is still under construction, and you pay in stages until handover. The apartment is delivered new, matching a technical specification attached to the contract.
It works particularly well for three kinds of buyers. Families planning aliyah who want a brand-new home ready when they land, with no renovation. Investors looking for an easy-to-let unit with parking, an elevator, a safe room (mamad) and new common areas. And buyers who would rather spread their financial effort than pay the full price within weeks, as in a resale purchase.
The trade-off is that you are buying from plans, a specification and a developer's reputation. You accept a wait until delivery and some uncertainty about the finished product. Israeli law provides strong protections precisely to manage that risk, as long as you know how to use them.
For buyers living abroad, distance is the real challenge: it is hard to judge an up-and-coming neighborhood, walk through the show apartment or follow the build. That is where independent local support, separate from the developer, makes the difference.
The Sale Law guarantees (Hok HaMecher)
The Sale (Apartments) (Assurance of Investments of Persons Acquiring Apartments) Law, known as Hok HaMecher, is the foundation of your protection. The principle is simple: every payment you make to the developer must be covered by a guarantee provided for by law. In practice this is usually a bank guarantee issued by the bank financing the project, or an insurance policy issued by an insurer. If the developer goes bankrupt or fails to deliver, that guarantee lets you recover what you paid.
Payments go through the project's payment voucher booklet, the “pinkas shovarim”. Each voucher is linked to a dedicated project bank account monitored by the accompanying bank. When you pay with a voucher, the bank records the payment and issues the matching guarantee in your name. You should then receive the guarantee document: keep it safe.
The key takeaway: paying outside this channel means losing the protection. A direct transfer to a developer's other account, a cash payment, a deposit handed to a middleman or a “side deal” for a discount are not covered. If anyone suggests that kind of arrangement, treat it as a major red flag.
Before signing, your lawyer checks that the project has an accompanying bank, that vouchers are issued in your name and that the contract requires a guarantee for every payment. They also check when the guarantee is released, normally once your rights have been registered.
Linkage to the construction input index
Off-plan prices in Israel are usually index-linked: payments due after signing are adjusted according to an index. For years, contracts could link the entire outstanding balance. Amendment No. 9 to the Sale (Apartments) Law tightly restricted this practice.
For contracts signed from 07/07/2022 onward, only linkage to the construction input index (madad tsomet ha-bniya) is allowed. Other indices can no longer be used for this purpose.
- The first 20% of the price you pay is not index-linked.
- At most 50% of each subsequent payment can be linked, which means no more than 40% of the price overall.
- Linkage stops at the delivery date stated in the contract, even if delivery is late: a developer's delay cannot increase your indexation bill.
Practical tip: paying earlier reduces your exposure to the index. If you have cash available, negotiating a faster payment schedule, or paying a larger share up front, limits the portion of the price that can be adjusted. Your lawyer checks that the contract's linkage clause complies with these rules and does not bring indexation back in through another route.
Delivery delays
Construction delays are common in Israel. The law sets out automatic compensation that does not depend on the developer's goodwill. A 60-day grace period is allowed after the contractual delivery date. Beyond that, compensation is owed retroactively from the first day of delay.
It is calculated on a reference rent for a comparable home: 150% of that rent for the first 8 months of delay, then 125% from the 9th month onward. The aim is to compensate you for having to live elsewhere, or for lost rental income, while the apartment is not delivered.
Developers sometimes claim force majeure to avoid paying: labor shortages, administrative decisions, the security situation. Every case is different and should be reviewed with a lawyer, against the contract and the actual circumstances. Never sign a waiver of your rights at key handover without your lawyer's advice.
Key handover and after delivery
As delivery approaches, the developer invites you to an inspection. This is when you record every defect: finishes, tiling, windows and doors, electrics and plumbing, compliance with the specification. Bring an independent engineer or inspector (bodek), especially if you live abroad. The Sale Law also sets periods during which the developer must repair defects found after delivery: your lawyer will tell you which apply to your contract.
After handover comes the registration of your rights, which can take time in a new building, then day-to-day building life: residents' committee, fees, utility connections. If you are not living in Israel yet, we can attend the inspection on your behalf, follow up on repairs and prepare the property for letting.
Checklist before you sign
Print this list and tick off every point with your lawyer before committing to a developer.
- Developer strength: completed projects, track record on deadlines, buyer reviews, financial standing.
- Permit: has the building permit been granted, or only applied for? Check what is actually approved.
- Guarantees: named accompanying bank, vouchers in your name, a guarantee for every payment.
- Payment schedule: dates and amounts consistent with real construction progress.
- Compliant linkage clause: construction input index only, within legal limits.
- Delivery date: a specific date written in the contract, not just an estimate.
- Technical specification (mifrat): materials, fittings, floor areas, orientation, parking and storage described in detail.
- Developer's legal fees: amount and cap stated in writing.
- Right to changes: what you can alter, at what cost and until which stage.
- Final inspection: handover protocol, snag list and timeframe for fixing defects.
Costs and purchase tax
On top of the price come purchase tax (mas rechisha), your lawyer's fees, the developer's legal fees and, where relevant, an agency commission. The tax depends on your status: resident buying an only home, buyer of an additional home, non-resident or new oleh. On an off-plan purchase it is calculated on the contract price and paid within weeks of signing, not at delivery.
To estimate the full cost of your project based on your situation, use our calculator, built on the official tax scales.
Calculate your Israel purchase costsFrequently asked questions
Can a foreigner buy off-plan in Israel?
Yes. A non-resident can buy a new-build apartment from a developer under the same legal framework as a resident, with the same guarantees. Only the purchase tax differs by status.
What happens if the developer goes bankrupt?
If every payment went through the voucher booklet and was covered by a statutory guarantee, you can call on that guarantee to recover what you paid. That is why you should never pay outside the official channel.
Can I negotiate with a developer?
Often, yes: price, payment schedule, parking, upgrades or the developer's legal fees. Room for negotiation depends on how advanced the project is and on demand. We prepare that negotiation with you.
Do I need to be in Israel to sign?
No. With a power of attorney prepared by your lawyer, you can sign remotely. We arrange video viewings, project due diligence and construction follow-up through to handover.
Who handles rentals once the apartment is delivered?
We can take over from handover: inspection, furnishing if needed, letting and full property management, with a free estimate within 24h.
General information only; does not constitute legal advice.