The Tenant Protection Law: Why do lease agreements specify that it is inapplicable?

Before delving into the detailed explanation, let’s start with the conclusion:

Tenant Protection Law: Regulating Landlord-Tenant Relations

The Tenant Protection Law regulates contracts. It covers landlords and protected tenants. The law restricts evictions. It also limits rent increases.

Protected Tenants: Understanding Your Rights

Property owners want to avoid this law. They try to clarify it doesn’t apply. However, protected tenants still benefit. This holds true despite any contract clauses. If you’re a protected tenant, the law protects you. This is regardless of lease wording.

Background to the Enactment of the Tenant Protection Law

Tenant Protection Law: Historical Context

This law evolved from 1930s mandatory legislation. It responded to two major global shifts. World Wars halted property construction. Simultaneously, many new immigrants arrived in Israel. This led to overpopulation versus available properties. A severe housing shortage resulted.

Landlord Exploitation: Origins of Tenant Protection

Property owners exploited this imbalance. They significantly raised prices. They acted arbitrarily. Those resisting high prices faced easy eviction.

The British Mandate authorities then governing the land sought to curb this phenomenon and enacted the “Landlords and Tenants (Eviction from Premises and Rent Restriction) Ordinance, 1934“. The ordinance’s name speaks for itself. Indeed, its two central provisions are the restriction of an owner’s ability to evict a tenant from a property; and the restriction of the rent that can be charged to tenants.

For example, Section 4(1) of the Ordinance stipulates that “no court or judge or officer of enforcement shall give judgment or order for the eviction of a tenant from his dwelling even if the term of the tenancy of that tenant has expired,” except under special circumstances (such as non-payment of rent; breach of the lease; willful damage to the property; etc.). A whole section is dedicated to maximum rent according to the type of property.

Upon the establishment of the State of Israel, the Israeli legislature inherited the ordinance and gave it an Israeli version. It began with the Tenant Protection Law, 5714-1954 and culminated in the “Tenant Protection Law [Consolidated Version], 5732-1972“.

Key Provisions of the Tenant Protection Law and Why Landlords Are Concerned About its Applicability

Firstly, the law created a list of tenants who would be considered protected tenants. For example, a tenant who: paid key money; did not pay key money but entered the property before 1940; was entitled to hold the property until August 20, 1968, and the lease did not explicitly state that the law did not apply to them; entered the property after August 20, 1968, but the lease stipulated that the law applied to them; a “continuing tenant”—that is, a family member to whom the rights of the original protected tenant were transferred; and others. Today, there are almost no “original” protected tenants, but mostly continuing tenants.

Tenant Protection Law

Tenant Protection Law: Eviction Restrictions

The Tenant Protection Law limits landlord evictions. A protected tenant cannot be evicted. This holds despite other contract terms. Eviction only occurs under Section 131 events.

Grounds for Eviction: What Qualifies?

Examples include: unpaid rent, lease breaches, willful property damage. Also, habitually harassing neighbors. Eviction restrictions are very stringent.

Eviction for Owner Use: Alternative Housing

Even for owner’s use, landlords must provide notice. They must offer alternative housing in writing. The law also caps rent for protected tenants. This depends on property characteristics.

It is already clear why almost every lease agreement states that the Tenant Protection Law will not apply to its provisions. A protected tenant has additional rights that a “regular” tenant does not have. Landlords want to remove any doubt that the rights of their new tenant are limited to a “non-protected” reality. Of course, if the specific tenant meets the definition of a “protected tenant,” a clause negating the applicability of the law’s provisions will not help the landlord. However, there are very few such tenants left, and landlords routinely negate the applicability of the law’s provisions, sometimes without even knowing why.

The Law’s Lack of Relevance to the Current Reality

Undoubtedly, over the years, the economic and legal realities have changed. The supply of housing has increased; tenants are no longer the “distressed tenants” that protected tenants were at the time of the state’s founding; and property owners are no longer those “powerful landlords” whose entire wealth was concentrated in real estate, but hold diverse assets. In addition, the Basic Law: Human Dignity and Liberty was enacted in the 1990s, establishing the right to property as a fundamental constitutional right.

This combination of factors, along with the new status of the right to property, has blurred the legitimacy of infringing on the property rights of property owners through additional rights for tenants. This change has been widely noted by the courts, which have repeatedly pointed out the diminishing necessity of the Tenant Protection Law; significantly reduced its scope; and even called for its repeal, arguing that the reasons for its enactment are no longer relevant.

However, some argue that the housing shortage has not disappeared, but has merely changed its form, resulting in exorbitant housing prices that are not curbed by regulatory price caps. Laws have been enacted to balance the status of tenants and landlords, and the government has initiated various real estate projects. However, tenants are still forced to pay high prices for apartments that are often far from justifying them; and the housing market has become a symbol of Israel’s high cost of living.

Weak Winds of Change: The Social Protest and the Fair Rent Law

Israel’s Social Protest: Housing and High Costs

In 2011, the “social protest” erupted. It focused on Israel’s dire housing market. About a million Israelis protested in Tel Aviv. They set up tents and raised their voices.

Trachtenberg Committee: Solutions for Cost of Living

Prime Minister Netanyahu formed the Trachtenberg Committee. This 14-member public committee aimed to lower living costs. In September 2011, the Knesset approved some findings. For housing, tax breaks were given to eligible individuals. Multi-property owners faced tax increases.

About four years later—and as a further result of the protest—a bill to amend the Rent and Loan Law, 5731-1971 was submitted to the Knesset.

Fair Rent Law: Strengthening Tenant Rights

The amendment aimed to update old laws. It sought to favor tenant rights. Approval was slow, mirroring political instability. In summer 2017, the law passed.

New Lease Regulations: Key Innovations

Many call it the “Fair Rent Law.” It’s an amendment, not a new law. Innovations include: mandatory written leases. Detailed agreement provisions. Limited landlord deposit amounts. Specified defect responsibilities for each party.

Understanding the provisions of this law is crucial for property owners and tenants alike. For a guide for landlords and tenants in light of the Fair Rent Law, click here.