Frequently asked questions on all stages of NOP 38

To get an answer from our professional, experienced staff, click on the relevant question.

Is there a central information page published by the competent authorities on NOP 38?

The Ministry of the Interior publishes from time to time relevant data and files of frequently asked questions and answers. Following are the links:

The Planning and Building Law – NOP 38 Combined Version

Summary of Ministry of the Interior’s questions and answers 

What is the difference between NOP 38/3 and NOP 38/2 (demolition and building)?

At the bottom line – in both projects the residents get upgraded apartments (at a higher value), but the way to get them is different: while in demolition and building projects the residents are evacuated to alternative accommodation with the building being demolished and replaced by another which is built in its place, in NOP 38/3 an existing building is usually renovated (although the law also allows to demolish a building and rebuild it), equipped with reinforces, Mamad, elevator and balconies, and undergoes a renovation of facades and environment.

The purpose of both plans is different (38/2 – assisting weak populations versus 38/3 – reinforcing buildings against earthquakes) as well as the duration of the projects (naturally depending on the developers).

There are differences also in terms of the residents’ rights during the projects and therefore, it is highly recommended to consult with an attorney before starting a 38/2 or 38/3 project.

To conclude, every apartment owner who wishes to take part in any of the NOP 38 projects should be familiar with the advantages and disadvantages of the formats as well as the costs, obligations and rights of all parties involved. Sometimes it is better to participate in a NOP 38/2 project (if possible of course) and sometimes – in 38/3.

It is advisable to consult with professionals in the area (developers, attorneys, appraisers, architects etc.) and make an informed decision that will increase the value of the apartments participating in the chosen project.

Are there any other benefits that the residents can get (and not every developer wants to disclose)?

In addition to the construction benefits and additional construction powers, the law provides for the two following taxation benefits to which the residents are entitled:

  1.  A reduced rate of betterment levy.
  2. Exemption from betterment tax and sale tax in the sale of an asset the value of which increased following the realization of NOP 38.

It is important to check with experienced professionals which entitlement is available to the residents since handling taxation challenges in NOP 38 projects requires experience, familiarity and extensive knowledge. Further information about the additional rights – see in the law “Complementary Legislation to NOP 38“.

How can I start and embark on a NOP 38 project in my building?

Only several simple steps stand between you and starting a NOP 38 project in your building:

  • Convene the residents in order to get their interest in this project – the advantages, benefits as well as disadvantages. In this meeting it is recommended to map the residents’ wishes.
  • Based on this mapping and summarizing the residents’ wishes – choose a representative that will contact the developers and clarify this wish list.
  • It is advisable to meet experienced developers with financing and project realization abilities, and mainly to examine to what degree their plans are compatible with the residents’ wish list.
  • Select your preferred developer.
  • As of that moment the chosen developer/company will handle all aspects of the project, from submitting a building permit application to actually implementing the plan.

To what degree does a NOP 38 project actually improve and increase the apartment value?

There is no doubt that a NOP 38 project improves and increases the value of the building in general and the value of the apartments in particular. Appraisers and real-estate brokers estimate such increase within the range of 25%-40%.

In addition, we found an article for you that collects and analyses these data.

What can be done under a NOP 38 project?

Under a NOP 38 project (and after the suitable permits have been given), one or more of the following actions can be performed:

  • Reinforcing the building against earthquakes
  • Adding a room / Mamad to each apartment
  • Adding a sun balcony to each apartment
  • Installing a high standard elevator
  • Developing public areas – renovating the garden and sitting areas, outdoor lighting, fences etc.
  • Improving the building facades
  • Renovating and upgrading lobby and staircase
  • Adding personal store rooms
  • Improving public rooms (gas, toilet, shelter etc.)

Further details in “What do the residents gain?”

Is it required to reach the agreement of all the building’s residents to realize NOP 38?

In order to realize a NOP 38 project, the law does not require reaching the full agreement of all the building’s residents. The law provides that an agreement of two thirds of the apartment owners is required (full agreement is required in NOP 38/2).

However, a NOP 38 project without a full agreement will have to face challenges (most of them surmountable) when promoting the process, which may prejudice the building rights and project realization times and damage the financial feasibility of the project.

Therefore, our position as a company is to try and reach to understandings and to the agreement of all the building’s residents before launching the project.