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Home Hit by a Missile: Rebuilding, Permits and the New Law

Home hit by a missile: what the Property Tax Compensation Fund covers, when rebuilding needs a permit and what the new rehabilitation law offers owners.

By Adv. Kobi Bell11 min readPlanning and Building

Early this week, a decision of the Tel Aviv District Appeals Committee for Planning and Building was reported in the case of a couple from Ramat Aviv whose home was hit by a missile during Operation Roaring Lion. The couple sought to demolish the damaged unit, the end unit of a row-house building, and to rebuild it as two stories over a basement. The local committee refused, and only on appeal was the refusal set aside. Owners of a home hit by a missile discover, as this couple did, that the physical damage is only the beginning of a long legal process.

The reason is that a home hit by a missile confronts its owners with several separate legal regimes. The first is the Israel Tax Authority Property Tax and Compensation Fund, which is supposed to pay for the repair. The second is planning and building law, which determines what may be built in place of what was destroyed. And since April 2026 there has been a new track as well, the War Damage Rehabilitation by Way of Urban Renewal Law, which allows the rehabilitation of a single building to be turned into a project covering an entire area. Each regime follows its own logic and moves at its own pace, and the friction between them is exactly where apartment owners tend to lose rights.

What the appeals committee decided in the Ramat Aviv case

According to the Nadlan Center report, the permit application was filed on January 27, 2026, and rejected on March 23, 2026. The local committee based its refusal on a disproportionate increase in volume, on exceeding the main building areas and on deviation from the provisions of the plans. Behind that general language lay a fairly precise dispute over how lot coverage is divided between the ground floor and the floor above it. An old plan from 1963 set a rigid split of 35 percent for each floor, while a later detailed plan, from 1985, allowed coverage of up to 44 percent on the ground floor. The municipality insisted on the old split.

The chair of the appeals committee, Attorney Michal Dagani Halberstam, held that the provisions of the later plan prevail over those of the earlier one, and that the total building rights remain the same; only their distribution between the floors changes. Alongside this came a finding whose significance reaches beyond the private case: the municipality itself had previously used the same calculation method for an adjacent unit in the same building. The appeals committee held that a planning authority may not abruptly change the way it calculates for the same building and the same plans “without weighty planning justification.” The refusal was set aside, and the matter was sent back for a technical review of the roof height and of how the unit fits into the row-house building.

The decision carries two lessons. A missile does not change planning law: rebuilding a destroyed home is treated as a new permit application, judged under the plans in force today and not by what stood on the site on the eve of the strike. At the same time, the local committee is bound by the rules of administrative law, including the duty of consistency and the hierarchy among plans, so a refusal resting on a strict and inconsistent interpretation is not the end of the road.

The Property Tax Compensation Fund: restoring the prior condition, and nothing more

Compensation for direct damage to a home is governed by the Property Tax and Compensation Fund Law, 5721-1961, and by the regulations issued under it, among them the Property Tax and Compensation Fund (Payment of Compensation) (War Damage and Indirect Damage) Regulations, 5733-1973. The guiding principle for the structure is restoration to its prior condition: the Fund pays for whatever is needed to return the home to its condition on the eve of the strike, with no ceiling. For contents, by contrast, ceilings have been set according to the type of item and the composition of the family. Private home insurance policies generally do not apply to security-related damage, which is why the Fund is usually the only source of recourse.

This principle leads to a conclusion many apartment owners are not prepared for: the Fund does not pay for upgrades. An owner who takes advantage of the demolition to enlarge the home, add a floor or change the layout will pay for the addition out of pocket and will need a permit. Suppose the owner of a single-family house that was destroyed receives an assessment based on the cost of rebuilding it as it was, but the local committee conditions the permit on requirements that did not apply when the house was first built. The gap between the assessment and the actual cost does not close on its own, and the question of who bears it should be settled at the appraisal stage, before a contract with a builder is signed.

When the home is not fit to live in, the Fund may order an evacuation to suitable alternative housing, a hotel for example, or finance housing in some other way during the rehabilitation period. The Fund's decisions can be appealed, but that route is a long one. A special report by the State Comptroller from January 2026 found that appeals filed with the Compensation Fund's appeals committees took an average of 851 days to handle, about two years and four months. The battle over the scope of compensation is therefore fought mainly at the appraisal stage, on the basis of complete documentation of the damage, photographs from every angle and, where appropriate, opinions from an engineer and an appraiser engaged by the owners.

When rehabilitation becomes new construction requiring a permit

As long as the work is a repair that returns the home to what it was, the planning question usually stays in the background. It comes to the fore in full force when the structure has been destroyed, when engineers determine that it is not worth repairing, or when the owner wants to build something different. From that moment, an apartment hit by a missile becomes, in legal terms, an ordinary building permit application with every stage that entails: a survey, a submission plan, a review of rights under the applicable plans, conditions imposed by the licensing authorities and, at times, objections from neighbors.

Older neighborhoods are often subject to several layers of plans from different periods, each adding its own provisions on lot coverage, height, building lines and use of the roof space. A house built decades ago does not always conform to the plans in force today, and the fact that it stood there lawfully confers no automatic right to rebuild it in the same form. Yet the local committee, for its part, may not choose the stricter interpretation simply because it is stricter. When a later detailed plan regulates the same matter, its provisions generally prevail over an earlier provision, and an authority that has applied a particular calculation method must explain why it is departing from it.

An applicant whose permit request has been denied may file an appeal with the District Appeals Committee for Planning and Building, generally within 30 days of receiving the decision. Such an appeal is not a letter of complaint but a quasi-judicial proceeding that examines the wording of the plans, the planning history of the lot and the committee's own earlier decisions. In the Ramat Aviv case, the appeal relied heavily on a comparison with the file for the adjacent unit, and a detail of that kind turns up only for someone who has taken the trouble to look for it in the permit archives.

The War Damage Rehabilitation Law: a collective track for a declared zone

At the end of March 2026, the Knesset passed the War Damage Rehabilitation by Way of Urban Renewal Law, 5786-2026, which took effect on April 5, 2026. The law does not replace the Compensation Fund, and it does not apply to every damaged home. It applies to an area that the government, or a ministerial committee authorized for the purpose, has declared a rehabilitation and renewal zone, on the recommendation of an advisory team whose members include, among others, the Planning Administration, the Governmental Authority for Urban Renewal, the Chief Government Appraiser, Property Tax and the local authority. Such a zone may consist of a lot on which a building was destroyed, or of at least three buildings with a combined total of at least 12 apartments, where engineers have determined that they suffered heavy damage whose rehabilitation will take a long time. The law also covers damage caused since June 2025.

The first declarations came at the end of June 2026, covering four zones with 310 apartments in 34 buildings, in Dimona, Arad and Rehovot among other places, and by July six rehabilitation zones had already been declared. The idea behind the law is to replace each owner's solitary journey through the local committee with a single plan for the entire zone, on binding timetables. The local authority must announce its intention to advance a plan within 21 days of the declaration, submit it within three months and have it deposited within six months. If it fails to meet these deadlines, the planning passes to the Committee for Planning Preferred Housing Sites. In the initial period following a declaration, the issuance of building permits in the zone is restricted, so that facts are not created on the ground before the overall planning has been considered.

The enhanced exit agreement and the Chief Government Appraiser's assessment

From the apartment owner's point of view, the law's most significant innovation is the option to leave. A developer recognized as a rehabilitation developer must offer every apartment owner a rehabilitation agreement, under which the owner will receive a new apartment in the building to be constructed, together with an enhanced exit agreement, under which the owner will sell their rights to the developer for cash. To obtain rehabilitation developer status, the developer must sign up a special majority: the owners of a majority of the apartments in each of most of the buildings in the zone, or the owners of four-fifths of all the apartments in it.

The exit price is not left to free negotiation. Within 35 business days of the declaration, the Chief Government Appraiser, or an appraiser acting on the Appraiser's behalf, prepares an assessment for each apartment, and it is delivered to the owners within 40 business days. The assessment is based on the value of a new apartment in the same area, as of the time before the damage, and may not be less than the amount a sale of the apartment between a willing seller and a willing buyer would have produced. In the enhanced exit agreement, the apartment's area is calculated with the addition of one-third of the additional area customarily granted under the local committee's policy on consideration for owners, or with the addition of 4 square meters of main area. Owners may submit information about their apartment to the appraiser and may object to the assessment.

The exit agreement must be signed within 95 business days of the declaration. The developer pays the consideration within 90 days of being approved as a rehabilitation developer or of the deposit of the plan, whichever is later, linked to the Consumer Price Index. The Director of Property Tax may help the developer finance the purchase of the rights with money from the Compensation Fund, and the law sets timetables for the developer's performance and sanctions for delay.

The choice between returning and leaving is not a purely financial calculation. An owner who chooses to return binds their fate to a project that will take years, with the familiar risks of urban renewal, and can expect a new, larger apartment at the end of it. An owner who chooses to leave gains certainty but gives up the neighborhood and has to buy another apartment in a market that will not wait. Where the apartment is mortgaged, where a cautionary note is registered against it, or where it was inherited and has not yet been registered in the heirs' names, the agreement must deal with all of these matters, and they should be looked into before signing, not after.

Owners who refuse, older owners, and what happens to the Property Tax compensation

The law does not allow a single apartment owner to hold up an entire zone. A rehabilitation developer may sue an owner who refuses, and the court may order that owner to sign a rehabilitation agreement or an enhanced exit agreement, and may even direct that a lawyer or an accountant sign on the owner's behalf. The considerations the law lists include the harm to the defendant, the developer's good faith and the uniformity of the terms it offered all the owners, the economic viability of the project and the housing alternatives. Special alternatives have been established for owners who were 70 or older at the time of the damage, among them a replacement apartment, a cash payment, a smaller apartment or a move to a retirement home.

One point that is easy to overlook concerns the Compensation Fund. In a declared zone, the Director of Property Tax may defer payment of compensation for direct damage, after comparing the cost of the repair with the cost of alternative housing and considering whether a repair is possible at all. If payment is deferred, the owner is entitled to reasonable rent until the property is handed over to the developer. An owner who planned to restore the apartment with the Fund's money and move back within months may find that the declaration has changed the picture, and that the home has become part of a broad project beyond their control.

Steps for owners of a home hit by a missile

The first step is to document the damage and file a claim with the Compensation Fund as soon as possible, because the deadlines for reporting damage and submitting a claim are short, and the Fund's appraiser determines the extent of the damage according to what was found and what was presented. Before signing an appraisal summary or a repair agreement, make sure the assessment covers every component of the structure, including hidden damage to the frame, the waterproofing and the building systems.

If demolition and rebuilding become a possibility, the planning review should come before the architectural design. That means checking which plans apply to the lot, what earlier permits provided and how the local committee calculated rights for similar buildings on the street. A refusal does not end with a letter: the deadline for an appeal starts to run on the day the decision is received, and the appeal may also raise the consistency argument that decided the Ramat Aviv case.

Owners whose home lies in a declared zone, or in one under consideration for declaration, are on an entirely different track. They need to follow the date of the declaration, review the assessment when it arrives and decide, within the short deadlines the law sets, whether to return to a new apartment or to leave. It is one of the largest financial decisions a family makes, and here it is made under time pressure and in the aftermath of trauma.

In legal terms, no two homes hit by a missile are alike: the registration status, the applicable plans, the damage assessment and the status of the zone all affect the answer. Anyone whose home has been damaged and who faces a decision by the Compensation Fund, the local committee or a rehabilitation developer may contact the firm to have the documents and deadlines in their case reviewed, before a decision is made that is difficult to undo.

Questions and answers

Does the Property Tax Compensation Fund pay to rebuild a home destroyed by a missile?

The Fund compensates for direct damage to the structure under the principle of restoration to its prior condition, with no ceiling, meaning the amount needed to return the home to its condition on the eve of the strike. It does not finance an expansion or an upgrade. An owner who wants to build a larger house will pay for the addition and will need a building permit. For contents, unlike the structure, the regulations set ceilings.

The local committee refused a permit to rebuild a home hit by a missile. What can I do?

You can file an appeal with the District Appeals Committee for Planning and Building, generally within 30 days of receiving the decision. The appeals committee examines the applicable plans, their interpretation and the consistency of the local committee with its own earlier decisions. In a decision reported on November 3, 2026, a refusal to allow the rebuilding of a home hit by a missile was set aside, partly because the municipality had departed from a calculation method it had used in the same building.

What is the difference between a rehabilitation agreement and an enhanced exit agreement?

Under a rehabilitation agreement, the apartment owner receives a new apartment in a project to be built in the declared zone. Under an enhanced exit agreement, the owner sells their rights to the developer for cash, based on an assessment by the Chief Government Appraiser. The consideration is based on the value of a new apartment in the area, plus an additional area set by law, and it is linked to the Consumer Price Index.

How long do I have to decide whether to leave the project?

An enhanced exit agreement must be signed within 95 business days of the declaration of the zone. The assessment is supposed to reach the owners within 40 business days of the declaration, so in practice the time left for review is limited. It is advisable to examine the registration status, the mortgage and the options for buying a replacement apartment as soon as the assessment arrives.

Can I refuse to sign with the rehabilitation developer?

You can, but refusal is not the final word. A rehabilitation developer may apply to the court, and the court may compel the apartment owner to sign a rehabilitation agreement or an exit agreement, after weighing, among other things, the harm to the owner, the developer's good faith and the housing alternatives. Special alternatives have been established for apartment owners who were 70 or older at the time of the damage.

My home was damaged, but the area has not been declared. Does the new law apply to me?

The law applies only to a zone that the government or a ministerial committee has declared, on the recommendation of the advisory team. Without a declaration, the route runs through the Property Tax Compensation Fund and, if rebuilding is required, through an ordinary permit application to the local committee. You can check with the local authority whether the area is being considered for declaration.

Sources

This article provides general information and is not a substitute for legal advice on your specific matter. More on Planning and Betterment Levy · Contact the firm

First published in Hebrew. Read the Hebrew original

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