Israel – Property Letting

How does the property letting process work in Israel?

Renting out an apartment in Israel means operating within a distinct legal framework that seeks to balance the interests of both parties. From initial marketing through tenant selection, contract execution, security collection, and handing over keys, each stage follows established conventions. One fundamental difference from some other jurisdictions is that verbal rental arrangements carry little weight under Israeli law — written tenancy agreements are firmly required for the protections of the Fair Rental Law to take effect.

Landlords typically advertise through a combination of online platforms — most notably Yad2, Israel’s dominant classifieds portal — licensed agents, and personal networks. Listings should accurately reflect the property’s actual condition and facilities. When evaluating prospective tenants, landlords routinely check identity documents and evidence of employment or income, and it is very common practice in Israel to require a guarantor or bank guarantee as additional security.

Standard rental contracts run for 12 months, frequently with an extension option. Agreements covering two to three years upfront — with built-in rent adjustment provisions — are also prevalent. Israel does not operate a centralised national tenancy register of the kind found in some European countries, such as Germany’s Mietvertrag registration system or the deposit protection schemes used in the UK and Ireland. Instead, tenancy arrangements are governed as private contracts under the Rental Law and, where relevant, the Fair Rental Law of 2017.

A well-constructed Israeli tenancy agreement should address the monthly rent and payment schedule, the duration of the lease and any renewal provisions, the deposit or security arrangement, allocation of utility costs, maintenance obligations, early termination conditions, and a record of the property’s condition at the outset. Foreign landlords unfamiliar with local practice would be wise to have a contract drafted or at minimum reviewed by an Israeli lawyer before it is signed.

What types of rental arrangements are available in Israel?

Israel’s rental market divides broadly into long-term residential letting, medium-term furnished letting (which appeals to corporate tenants and newly arrived expatriates), and short-term or holiday rentals. Each category carries its own tax and regulatory implications, so landlords should establish which type of letting they are undertaking before moving forward.

Long-term residential letting — ordinarily for periods of 12 months or more — is the most widely used arrangement and is governed by the Rental Law together with the Fair Rental Law of 2017. VAT is not charged on residential rentals where the term is under 25 years, excluding hotels and tourist accommodation. This exemption from VAT represents a meaningful advantage for private residential landlords.

Short-term and holiday letting — referred to in Hebrew as dirot nofesh or hascharat dira — functions under a different set of rules. In Israel, short-term rentals cover residential properties let for up to 30 days, primarily to tourists, business visitors, and temporary residents. This category includes apartments, houses, villas, and holiday homes marketed through platforms such as Airbnb and Booking.com, and is subject to local regulation and taxation that varies between municipalities.

The Israeli Tax Authorities classify short-term apartment rentals as a business activity. As a result, landlords operating in this space cannot claim the monthly tax exemption ceiling, nor can they access the flat 10% tax rate that applies to long-term residential letting. Income generated through short-term letting is instead taxed as active business income.

Short-term rentals including those on Airbnb are permitted in most Israeli cities, but some municipalities — among them Tel Aviv and Jerusalem — have put in place rules or restrictions specifically targeting short-term vacation lets, particularly within residential apartment blocks. There is no national association dedicated to short-term rental operators in Israel, though property owners must comply with requirements set at both national and local level. Landlords are advised to contact their local municipality before commencing any short-term letting operation.

What rental income can landlords expect in Israel, and how are rates set?

Israeli landlords and tenants are free to negotiate rental prices between themselves, provided both parties agree and the arrangement complies with applicable law. No national rent control mechanism or government price ceiling currently applies to the standard private rental market. Prices are driven by market conditions — including location, size, state of repair, proximity to public transport, schools, and prevailing demand.

There is presently no statutory cap on annual rent increases. Although the Fair Rental Law was designed in part to address this issue, the enacted legislation ultimately did not include this provision. A landlord wishing to increase the rent may do so at the end of a lease term, but only if the tenant agrees to the revised figure before signing a renewed agreement. In the absence of such agreed terms, a landlord has no unilateral right to impose a rent increase.

Gross rental yields in Tel Aviv sit at approximately 3.1% to 3.6%, which is modest by global standards, though the flat 10% tax option available to residential landlords keeps accounting relatively simple. Yields differ considerably across locations — demand is most pronounced in Tel Aviv, Jerusalem, Herzliya, and Netanya. Current rental market data is published by the Israeli Central Bureau of Statistics (CBS) and accessible through the Israeli government portal. Given market movements in 2024–2025, landlords should consult these sources for up-to-date figures.

Where a lease expires and the tenant remains in occupation with the landlord’s knowledge and consent but without executing a new agreement, the tenancy is generally treated as having rolled over month-to-month on the existing terms. Landlords should manage this situation actively, particularly when they wish to implement a rent review or have a defined end date in mind.

Do landlords need to provide a furnished or unfurnished property in Israel?

Israeli law places no obligation on landlords to offer a furnished property for standard long-term residential letting. In practice, market expectations differ by area and tenant type. In busy urban centres such as Tel Aviv and Jerusalem, both furnished and unfurnished lets are commonplace. Furnished apartments typically attract higher rents and are particularly sought after by corporate relocatees, new immigrants (olim), and tenants on shorter stays.

For unfurnished lets, the standard baseline typically includes fitted kitchen appliances, a solar water heater (dud shemesh), and air conditioning. Beyond these practical fittings, the Fair Rental Law of 2017 sets minimum habitability requirements: apartments must have functioning utilities, adequate ventilation, natural light, and a lockable entrance. Failure to meet these standards can expose a landlord to legal action regardless of whether the property is furnished or not.

Whether a property is furnished or not does not create a separate letting classification or alter the core tax treatment for long-term residential arrangements. However, landlords who market a property as fully serviced or hotel-style risk having it reclassified as a short-term or hospitality let, which carries the additional tax and VAT consequences described elsewhere in this guide. Accurate representation of the letting arrangement from the outset is therefore important.

Do you need a licence or registration to let a property in Israel?

No national landlord licence or formal registration with a tenancy authority is required for standard long-term residential letting in Israel. Foreign nationals may legally act as landlords and receive rental income irrespective of their visa status or physical location, and a significant number of foreign owners manage their Israeli properties entirely from overseas. Israel has no equivalent of, for example, the landlord registration programmes operating in Scotland and Wales, or Ireland’s Residential Tenancies Board registration system.

There are, however, meaningful compliance obligations. Landlords must report rental income to the Israel Tax Authority and, depending on the scale and character of their letting activity, may be required to register as self-employed or as a business entity. Landlords who rent out more than ten apartments are treated as running a rental business and taxed accordingly under business income tax brackets. Those renting five or fewer apartments are not generally considered business operators. Landlords renting between six and ten apartments are assessed individually by the Tax Authority.

Short-term letting sits in a more complicated regulatory position. Licensing requirements vary from one municipality to the next, and there is no national framework requiring platforms to verify licence compliance. Landlords intending to operate short-term lets should approach their local municipality directly to determine what permits or local approvals may be required. The Real Estate Brokers Regulations (Ethics and Professional Duties), which came into force in early 2025, introduced new obligations for all real estate agents — it is therefore important to confirm that any agent engaged to let your property holds a current valid licence.

How do you obtain a landlord licence or register as a landlord in Israel?

Since no national landlord licence exists for residential letting, the principal registration obligation for most landlords is with the Israel Tax Authority. The steps below outline the process a foreign landlord should follow to let property in Israel lawfully and in full compliance.

1. Obtain an Israeli tax identification number (Mispar Zehut Mezar). Foreign owners must have a tax ID to engage with the Israeli tax system. Registration of the property purchase with the Israel Tax Authority and the issuance of a tax identification number are steps your lawyer typically handles on your behalf.
2. Engage an Israeli lawyer and/or certified public accountant (CPA). The variety of tax tracks available (discussed below) means that professional guidance is essential before any letting commences. CPAs in Israel are regulated by the Institute of Certified Public Accountants in Israel.
3. Determine your tax track. Consult the Israel Tax Authority’s rental income guidance and, with your CPA, identify which taxation track — the exemption track, the 10% flat rate, or the marginal rate with deductions — best suits your circumstances.
4. Register with the Tax Authority if required. Where rental activity is classified as a business — typically where more than ten properties are let or short-term letting is conducted — registration as self-employed (osek murshe) with both the VAT authority and the Income Tax authority is mandatory.
5. Register with Bituach Leumi (National Insurance) if applicable. Where your letting activity constitutes business income, registration with the National Insurance Institute (Bituach Leumi) is also required.
6. Check municipal requirements. Approach your local municipality to establish whether any local permits or authorisations are needed, especially for short-term letting or properties in designated residential zones.
7. Ensure the property meets habitability standards. Before tenants move in, verify that the property satisfies the minimum standards prescribed under the Fair Rental Law of 2017, including functional utilities, adequate ventilation, natural light, and a lockable front door.
8. Draft the tenancy agreement. Use a written contract prepared by, or reviewed by, a qualified Israeli lawyer, ensuring full compliance with the Rental Law and the Fair Rental Law.

Professional service fees — for lawyers and CPAs — will vary depending on the scope of work. Note that VAT in Israel rose to 18% with effect from January 2025, affecting fees charged by lawyers, agents, and other professionals. Always confirm current fees and procedures with the relevant authority, as these are subject to change.

What are the rules around deposits in Israel?

The Fair Rental Law introduced, for the first time, a cap on the level of security that a landlord may require under a rental agreement. Several forms of security exist, including post-dated security cheques, promissory notes, personal guarantors, and third-party guarantors. Where the Fair Rental Law applies, the total amount of security is restricted to no more than one-third of the full rental period or three months’ rent, whichever is applicable.

Unlike the tenancy deposit protection schemes operated in the UK and Ireland, Israel has no government-backed centralised deposit protection system. Security held under Israeli rental agreements is typically retained by the landlord directly. The most common security arrangement in Israel combines post-dated cheques with a personal or bank guarantor — the latter being particularly prevalent where a tenant lacks an established credit history in Israel.

Most landlords will insist on a guarantor, especially when dealing with overseas tenants or younger renters. Where a guarantor is not available, a bank guarantee issued on behalf of the tenant may be an acceptable alternative. The circumstances under which deductions may be made from the security — for example, unpaid rent or damage exceeding ordinary wear and tear — should be explicitly set out in the tenancy agreement. Disputes over deposit refunds are ordinarily resolved through negotiation or, failing that, through the local Magistrate’s Court. Israeli law does not prescribe a deadline for returning the deposit, making it especially important to address this point clearly in the contract. Refer to the Israeli Ministry of Construction and Housing website for current guidance on deposit rules.

Who is responsible for maintenance and repairs in Israel?

Under the Fair Rental Law, damage arising from reasonable and ordinary use of the property is the landlord’s responsibility to remedy, unless the parties have expressly agreed otherwise. Where damage is of a nature that prevents normal occupation and demands urgent attention, tenants are entitled to call on the landlord to carry out the necessary repairs. If the landlord fails to act, tenants may, in accordance with the law’s provisions, arrange the repairs themselves and deduct the cost from future rent payments.

A tenant may exercise the right to terminate the lease early if the property fails to meet the habitability standards established under the Fair Rental Law, or if the landlord does not complete required repairs within the stipulated timeframes — 30 days for standard repairs and three days for urgent ones. These obligations are more demanding than those found in many comparable markets, and foreign landlords operating remotely must have a dependable local contact or property manager capable of responding within these windows.

Day-to-day minor upkeep and damage resulting from the tenant’s own misuse or negligence remain the tenant’s responsibility. Major structural work, significant appliance replacements, and defects in the fabric of the building fall to the landlord. Properties must maintain working utilities, sufficient ventilation, natural light, and a secure lockable entrance; failure to comply with these requirements can result in lease termination or authorised rent deductions for repair costs. Unresolved disputes between landlord and tenant are referred to the Magistrate’s Court.

How are letting agents used in Israel, and what do they charge?

Licensed real estate agents — known in Hebrew as tivuchim — occupy a prominent role in Israel’s rental market, particularly in sourcing tenants and establishing initial letting terms. Their services typically cover marketing the property, organising viewings, conducting tenant checks, and facilitating the execution of the tenancy agreement. A number of agents also provide ongoing property management, a particularly appealing option for landlords based outside Israel.

Israeli convention holds that the letting agent’s fee is shared between landlord and tenant — each typically contributing the equivalent of one month’s rent plus VAT. However, the Fair Rental Law prohibits landlords from passing agent fees on to tenants where the agent was acting exclusively on the landlord’s behalf; in such circumstances, the landlord must bear the full cost. In practice, where an agent acts jointly for both parties, the shared arrangement continues to be the norm. Fee responsibility should be clarified with the agent at the outset.

With VAT at 18% as of 2025, a one-month-rent agency fee effectively amounts to 1.18 months’ equivalent in total. The Real Estate Brokers Regulations (Ethics and Professional Duties), which came into effect in early 2025, imposed new obligations across the profession, making it important for landlords to confirm that any agent they instruct holds a valid current licence. For up-to-date information on fee structures and regulated standards, consult the Israeli Ministry of Justice or the relevant consumer authority.

What taxes apply to rental income in Israel?

Israel provides individual landlords with a choice of three separate taxation tracks for rental income, each designed to suit different financial circumstances. Israeli residents are taxed on their worldwide income, while non-residents are taxed only on income originating in Israel. Both groups are required to report rental income derived from Israeli property.

Track 1 — Full or Partial Exemption: Individual landlords letting residential property may, subject to eligibility conditions, claim a full income tax exemption on rental income from Israeli homes that does not exceed a prescribed monthly ceiling (NIS 5,654 in 2025). No prior approval is required to use this exemption. It is, however, unavailable to foreign residents owning Israeli property unless they can demonstrate that they do not own a home in their country of residence.

Track 2 — Flat 10% Rate: Landlords receiving income from Israeli residential property may, subject to eligibility, elect to pay tax at a flat rate of 10% on their gross rental income, with no expense deductions permitted. This is the track most commonly adopted by non-resident landlords, who benefit from its relative simplicity. It is the principal option available to foreign owners letting Israeli property from abroad.

Track 3 — Marginal Rate with Deductions: Under this track, landlords may elect to deduct expenses and depreciation from their rental income, with the balance then taxed at the individual’s applicable marginal rate. Tax under this track will be no less than 31% (with an exception for landlords aged over 60), but it permits the full deduction of all costs associated with the rental activity together with depreciation on the property.

Surtax: As of 2025, the portion of an individual’s annual taxable income from capital sources — including rental income — that exceeds NIS 721,560 attracts an additional 2% surtax, on top of a 3% surtax levied on total taxable income from all sources above the same threshold.

Short-term letting: As noted previously, the Israeli Tax Authorities treat short-term apartment rentals as a business activity, which means the flat 10% residential track is unavailable and income is taxed as active business income.

Municipal property tax (Arnona): Arnona, Israel’s local municipal property tax, varies considerably by city and neighbourhood. In Tel Aviv, the typical charge for an apartment is roughly 70 to 120 shekels per square metre per year. In the majority of residential tenancies, it is the tenant who pays Arnona, though this should be confirmed explicitly in the agreement.

Non-resident landlords should also consider the possibility of double taxation. Rental income may be subject to tax not only in Israel but also in the landlord’s country of residence, though a credit for tax paid in Israel will usually apply under domestic law or a bilateral tax treaty. Israel maintains tax treaties with a number of countries — the Israel Tax Authority and a local CPA can advise on specific treaty provisions. Given that rates and thresholds are reviewed annually, always verify current figures with a qualified Israeli tax adviser.

What are the rules around ending a tenancy or evicting a tenant in Israel?

Israeli tenancy law is considered to sit slightly on the tenant-protective side of the spectrum. While landlords have meaningful tools at their disposal to safeguard their property and rental income, tenant protections are comparatively robust, with an emphasis on due process, constraints on eviction, and financial safeguards reflecting the policy objective of maintaining housing stability in a high-demand and costly market.

A landlord may not remove a tenant arbitrarily or without lawful justification. Where a tenant holds a valid lease, the landlord must allow the lease term to run its course before seeking vacant possession — unless the tenant has breached the terms of the agreement. Even where a lease has expired, the landlord is still required to demonstrate a legitimate legal basis for eviction. Evictions sought on the ground of personal or family use require concrete supporting evidence, and long-term leases exceeding ten years must satisfy additional safeguard conditions.

Even in cases where grounds for eviction exist, the landlord must pursue a formal legal route. This typically means lodging a claim with the local Magistrate’s Court, which must authorise any eviction order. Self-help measures — such as changing locks or disconnecting utility supplies — are unlawful, and landlords who resort to such tactics may face a damages claim. Given the pro-tenant orientation of the Israeli system, any foreign landlord dealing with a tenant who refuses to vacate should seek immediate legal advice from a qualified Israeli property lawyer.

In the absence of specific contractual terms to the contrary, a tenant wishing to terminate the lease early is generally expected to give 60 days’ notice. Landlords should include clearly worded early termination and notice clauses in the tenancy agreement to prevent ambiguity.

What should expat landlords know about managing property remotely in Israel?

Foreign owners are entirely entitled to rent out Israeli property from abroad, and many do exactly that — engaging local property management companies or appointing trusted local representatives to oversee tenant relationships, handle maintenance, and manage Arnona payments on their behalf. Far from being merely a matter of convenience, having a reliable local presence is a practical necessity given the repair response timeframes mandated by the Fair Rental Law.

Whether purchasing from overseas or arranging to let remotely once a purchase is complete, much of the process can be coordinated with the assistance of a trusted Israeli property lawyer and agent. Granting power of attorney to your lawyer — authorising them to sign documents, complete registrations, and handle administrative matters — is an effective way to manage affairs from a distance. A power of attorney executed outside Israel will need to be notarised and apostilled before it can be used locally.

Non-resident landlords carry specific tax compliance obligations. As a foreign resident, you are required to pay income tax in Israel on rental income generated there, and may also face a tax liability in your country of residence, typically reduced by a credit for the Israeli tax already paid. The Israeli Tax Authorities have been stepping up efforts to identify foreign residents who have not been declaring Israeli rental income. It is important to register with the Israel Tax Authority, submit annual returns, and understand your obligations under any applicable double taxation treaty.

Moving rental income out of Israel is generally uncomplicated — Israel imposes no exchange controls on the transfer of rental proceeds abroad. Your bank may, however, request documentation confirming the origin of the funds, and your home-country tax authority may require disclosure. Property management fees paid to a local company are ordinarily deductible under the marginal rate taxation track. It is worth noting that Israel does not operate a golden visa scheme or any property-based residency pathway, meaning that ownership and letting of Israeli property confers no automatic entitlement to residency or citizenship.

Frequently asked questions

Can a non-resident own and let property in Israel?

Yes. Foreign nationals may legally act as landlords and collect rental income in Israel regardless of their visa status. There are no restrictions on foreign ownership of private residential property, and non-residents may manage their letting from abroad. Rental income must, however, be reported to the Israel Tax Authority, and engaging a local lawyer and CPA for professional guidance is strongly recommended.

Do I need a local agent to let my property in Israel?

There is no statutory obligation to use a licensed agent, though doing so is strongly advisable — especially for landlords based outside Israel. Many foreign owners appoint local property management companies or trusted local contacts to handle day-to-day tenant relations, maintenance coordination, and Arnona payments. Engaging a licensed agent also ensures compliance with the Real Estate Brokers Regulations that came into force in early 2025.

How much tax will I pay on rental income in Israel?

Individual landlords may, subject to eligibility, elect to pay tax at a flat rate of 10% on gross residential rental income with no expense deductions (as of 2025). Alternatively, landlords can opt for taxation at their marginal rate with full expense deductions, or — for resident landlords with modest incomes — claim an exemption on monthly rental income below NIS 5,654 (as of 2025). Non-resident landlords should consult the Israel Tax Authority and a local CPA for up-to-date guidance.

Is there rent control in Israel?

No statutory annual cap on rent increases exists in Israel. Any increase in rent must be agreed upon in the lease terms or renewal clauses; without such provisions, a landlord has no unilateral right to raise the rent. Market pricing is determined by supply and demand, with no government-imposed ceiling currently in force for the private rental sector.

How does the security deposit work in Israel?

Under the Fair Rental Law, security is capped at no more than one-third of the full rental period or three months’ rent (as of 2025). Unlike the UK or Ireland, Israel has no centralised tenancy deposit protection scheme. Security is typically held by the landlord in the form of post-dated cheques or a bank guarantee. The conditions for making deductions and the timeline for returning the deposit should be set out explicitly in the tenancy agreement.

Can I let my Israeli property on Airbnb?

Short-term rentals including Airbnb listings are lawful in most Israeli cities. However, certain municipalities — among them Tel Aviv and Jerusalem — have introduced rules or restrictions specifically affecting short-term holiday lets, particularly within residential apartment buildings. The Israeli Tax Authorities treat short-term rental income as a business activity, meaning the flat 10% residential tax track does not apply. Consult your local municipality and a CPA before establishing a short-term rental operation.

Who pays the letting agent fee in Israel?

It is customary in Israel for both landlord and tenant each to pay the letting agent a fee of approximately one month’s rent, plus VAT (18% as of 2025). The Fair Rental Law prohibits charging tenants for agent fees where the agent was acting solely on the landlord’s behalf; in those situations, the landlord is responsible for the full cost. Agency representation and fee liability should always be clarified in writing before an agent is instructed.

What happens if my tenant refuses to leave in Israel?

Even where there are lawful grounds for eviction, the landlord must follow a formal legal process, typically by filing a claim with the local Magistrate’s Court, which must issue an eviction order. Taking matters into one’s own hands — by changing locks, cutting utilities, or otherwise forcing a tenant out — is illegal and can expose the landlord to a damages claim. Given the moderately pro-tenant nature of the Israeli legal framework, landlords confronted with a tenant refusing to vacate should seek prompt advice from a qualified Israeli property lawyer.