The New Fair Rent Law – What Do You Need To Know?

Author:Barnea & Co
Profession:Barnea & Co

In July 2017, the Fair Rent Law (Temporary Order and Legislative Amendments), 5776 - 2015 was enacted, an initiative of MPs Stav Shaffir and Roy Folkman.

The main objectives of the New Law are to regulate the relationship between tenants and landlords and to define the minimum conditions for an apartment to be deemed "fit for dwelling."

Who? What? When?

The New Law does not apply to all leases, and prescribes that it will not apply to apartments for which the contractual relations between the landlord and the tenant differ from the standard contractual relations in a residential lease, such as:

vacation apartments; apartments in student dormitories; protected housing; any apartment to which the Tenant Protection Law applies; luxury apartments at rents exceeding NIS 20,000 per month; apartments being leased to a family member (spouse, sibling, parent); short-term rentals (three months and less) and long-term rentals (10 years and more). The New Law will come into effect on September 17, 2017. Unlike what was customary in the Hire and Loan Law, the provisions of the New Law are cogent and unconditional, unless the stipulation benefits the tenant.

Restrictions on Guarantees

If in the past the landlord could demand guarantees from a tenant to his heart's content, the New Law serves to help tenants and to restrict landlords by prescribing that a landlord may demand a guarantee in advance only up to the sum equivalent to one third of the rent for the entire period and never more than three times the monthly rent.

In addition to limiting the sum of the guarantee, the New Law clearly defines the circumstances under which the landlord may exercise the guarantee. According to the provisions of the New Law, the landlord is permitted to exercise the guarantee solely under the following circumstances:

failure to pay rent on time; failure to pay additional payments for utilities the tenant owes (electricity, water, gas, municipal tax, etc.); failure to repair defects in the property caused by the tenant's recklessness; failure to vacate the premises by the date prescribed in the lease. What Is “Housing Fit for Dwelling”?

The New Law defines the term "housing fit for dwelling" and, by doing so, basically defines which properties may be put up for let. Pursuant to the New Law, the property for let must contain adequate living conditions, including connections to electricity and water mains, connections to the sewage system, openings for...

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