Buying Off-Plan from a Developer (Kablan) in Israel: Sale Law, Payment Schedule, Indexation

What the Sale Law (Apartments) guarantees

The 1974 law on the assurance of apartment buyers’ investments (חוק המכר (דירות) (הבטחת השקעות)) is the backbone of an off-plan purchase. Its principle fits in one sentence: the developer may not collect more than 7% of the price without giving you security for every additional shekel. The law allows five forms of security; two dominate in practice. There is no escrow company and no title insurance: the guarantee replaces both.

In practice, every payment is made by shovar (payment voucher) from a book issued by the project’s bank, into a dedicated, closed account (heshbon liyvi); the bank then issues a guarantee in your name within 14 days. A developer who asks for a “direct” wire or for cash takes you outside the law: refuse.

Payment schedules: standard, 20/80, 10/90

The payment schedule (luach tashlumim) is the most negotiable part of the contract, and the one that changes the final cost most. Three models coexist in 2026.

Why do developers offer 20/80? Because their bank lends them against signed sales, not against cash collected: a 20/80 contract unlocks the construction financing and gives the buyer a cash-flow facility that replaces a discount. The trap is in the word “replaces”: an 80% balance indexed for two and a half years costs more than a 5% discount. The arithmetic is in the next section.

Three points to negotiate on the schedule, whatever the model: a financing clause (the contract falls away without penalty if the bank declines the loan within a set period), an indexation holiday on the first months or a cap, and moving the last payment to the actual handover of keys rather than to the announced delivery date.

Indexation to the construction cost index, with a worked example

The madad tshumot habniya (residential building input price index) is published monthly by the CBS, around the 15th, for the previous month. It tracks the cost of materials, labour and site equipment, not apartment prices. The contract provides that each payment not yet made is multiplied by the ratio between the index known on the payment date and the base index, usually the one known at signing. What is already paid is no longer indexed; what remains to be paid is indexed in full.

Over ten years, this index has risen by 2 to 4% a year on average, with spikes above 5% in 2022 and in 2024-2025 under the labour shortage. The prudent assumption in 2026 is 3% a year.

The same apartment on a standard schedule, where the balance shrinks at each construction stage, would carry roughly half the indexation, ₪70,000 to ₪80,000. In other words, the 20/80 “costs” nearly ₪70,000 more than the standard here, and a 5% discount (₪120,000) is worth less than the full indexation of the 20/80 (147,256 ₪). Hence the right question for the developer: “what is the final price if the index runs at 3% a year?”, and the right ask: an indexation holiday, total or capped, which is worth more than a free kitchen.

Two details. If the index falls, the contract almost always sets a floor. And the mortgage does not cover indexation: the bank lends on the contract price, the uplift comes from your own funds. Test it with the mortgage calculator, down payment increased by the expected indexation.

What the price includes, and what it does not

A new apartment’s price is listed inclusive of VAT, at 18% since 1 January 2025. There is no VAT on a resale sold by a private individual: at equal price, a new build is therefore “worth” 15% less before tax, which explains part of the new-versus-resale gap detailed on the new-build or second-hand page. New immigrants get no VAT exemption on property.

• Included: the apartment as described in the technical specification, the share of land and common areas, the mamad (the reinforced safe room required in every new home), usually one parking space and a storage room if the contract names them with their number.
• Often extra: a second parking space (₪120,000 to ₪250,000 in the center), an extra storage room, utility meter connections, condominium registration fees, air conditioning in some projects.
• Developer’s lawyer: the law caps what the developer may bill you for its lawyer at about ₪5,500 + VAT (an indexed amount), or 0.5% of the price if lower. That fee covers registration, nothing else.
• Your lawyer: 0.5 to 1% + VAT, or a flat ₪8,000 to ₪15,000. This is the lawyer who defends your interests; the developer’s lawyer defends the developer’s, by definition. Role and fees are detailed on the real estate lawyer page.

The full budget, new builds included, is detailed on the closing costs page.

The contract, the technical specification, changes and upgrades

The contract is drafted by the developer, on a 40-to-80-page template that is uniform for the whole project. It cannot depart from the Sale Law, but everything that is not regulated is written in the seller’s favour: “estimated” delivery date, broad force majeure, late-payment penalties, the right to alter the common areas, indexation with no floor. A lawyer who knows the city’s developers knows which clauses move (often about ten).

The mifrat techni (technical specification) is annexed to the contract on a form imposed by the Ministry of Housing. It lists the areas (apartment, balcony, mamad, parking), the materials, the fittings, the number of sockets per room, the brand or grade of sanitary ware and tiles, and the credits (zikuy) granted if you waive an item. Read it alongside the plans: it is the only enforceable document on what you are buying, and the gap between the specification area and the brochure’s “marketing” area commonly reaches 10 to 15%. The gross vs net square metres page explains how to read those figures.

Changes and upgrades (shinuyim ve-shidrugim) are the developer’s second profit centre after parking. Moving a partition, adding a socket, choosing tiles outside the catalogue: each request is priced by the developer, often 30 to 50% above market, payable separately and within a limited window. Past a certain stage of the build, nothing can be changed. Two rules: ask for the changes price list before signing, and route change payments through the project account so they stay guaranteed.

Delays, delivery, warranty period

The contractual delivery date is rarely met. Since 2023, delays of 6 to 12 months have been the norm in large projects, under the combined effect of the labour shortage, permits and reserve call-ups. The Sale Law, amended in 2011 and tightened in 2022, frames what you can claim:

1. Up to 60 days late: no compensation. That is the statutory margin, and the contract cannot freely extend it.
2. Beyond 60 days: the developer owes monthly compensation equal to the rent of a comparable apartment, uplifted by 50% in the first months and then by 25%, owed retroactively from the contractual date, first 60 days included. It is paid at the end of each month of delay, not at delivery.
3. Force majeure: the developer is exempt only for an event outside its control, unforeseeable at signing, and notified to you. The war was invoked for 2023-2024 delays; a contract signed after October 2023 can hardly invoke it for the same causes.
4. Delivery (mesirat mafteach): handover inspection with a protocol listing the snags, occupancy certificate (tofes 4) obtained. Do not sign a blank protocol; a building inspector (₪600 to ₪1,500) pays for the visit.
5. Bedek and warranty periods: the developer repairs defects reported during the bedek period (one year for most finishes, two to seven years for waterproofing, plumbing, structure), then during a three-year warranty in which the burden of proof reverses.

The overall timeline, from reservation to registration, is on the how to buy page, with a total of 1 to 5 years off-plan against 2 to 6 months for a resale.

Mortgage on an off-plan unit, purchase tax, registration

The mortgage. A bank lends on an apartment that does not exist yet, at the same ceilings as for a resale: 75% for a resident first home, 70% for a replacement home, 50% for an investor or a non-resident. It calculates on the contract price (not the indexed price), takes the Sale Law guarantee and then the built apartment as security, and pays directly into the project account against the vouchers. On a 20/80, most of the loan is released at delivery: the pre-approval can come late, but rates or your situation may have changed. Conditions from abroad are on the mortgages for non-residents page, those for new immigrants on mortgage for new olim.

Purchase tax. It is declared within 30 days and paid within 60 days of signing, on the contract price excluding future indexation, even if you move in three years later. On our 2,400,000 ₪ example:

For a future oleh, buying off-plan has one precise advantage: the date that counts for the schedule is the signing date, and aliyah can follow up to a year later. The purchase tax calculator gives the amount for your price and status; the buying as a new immigrant page details the conditions.

Registration. From signing, if the land is in the Tabu, your lawyer has a hearat azhara (caution note) entered in your name. Final registration waits for the building to be registered as a condominium (bayit meshutaf), the developer’s responsibility, which commonly takes two to five years after delivery, longer on Minhal (state) land. In the meantime, you own by contract and guarantee, and you can resell by assignment (hamchaa).

The real risks, and how they are covered

• Developer insolvency. Covered by the bank guarantee or insurance on every payment beyond 7%. Not covered: payments outside the voucher system, changes paid to subcontractors, the rise in prices in the meantime. Ask to see a guarantee already issued to another buyer in the project.
• Delay. Covered by statutory compensation beyond 60 days, provided the contractual date is a date, not “the quarter of”. Keep a 12-month rent margin in your cash plan.
• Change in the zoning plan (taba). The view, the height of the neighbouring building, the planned road: none of it is guaranteed by the contract. The lawyer checks the zoning in force and the permits filed; the rest is a bet.
• Financing refused or dearer at delivery. On a 20/80, the bank does not commit two years ahead. Covered by a financing clause, a renewed pre-approval and a safety margin in your down payment. A non-resident whose situation may change is better off with a standard schedule.

New builds negotiate differently by city: plentiful and discounted in the South and in Beit Shemesh, scarce and expensive in Jerusalem where they come through pinui-binui, dominant on the Netanya seafront. Prices by city are on the real estate prices city by city page.

What changes in 2027

Purchase tax thresholds and the 0.5% oleh schedule stay frozen until 15 January 2028: an off-plan contract signed in 2027 benefits from them whatever the delivery date. 20/80 offers and indexation holidays should become scarcer as the 2024-2025 stock clears and rates edge down. As long as the labour shortage lasts, a construction index at 3% a year remains a prudent assumption. For tax once you own (rental income, capital gains, reporting in your home country), see Shekel Guide.

Frequently asked questions

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