Fair Rental Law (2017): Overview of Tenancy Laws in Israel

The rental market in Israel was characterized for years by almost absolute freedom of contract, until the amendment to the Lease and Borrowing Law (known as the "Fair Rental Law") came into effect in the summer of 2017. The amendment established clear rules of the game between landlords (property owners) and tenants for the first time, in an attempt to protect tenants while preserving the landlord's property rights.

Legal Disclaimer: The law exempts short-term leases (less than 3 months - such as Airbnb), leases over 10 years, and luxury apartments (above a certain rent set by law). Updated: March 2026.

1. The Concept of "Appropriate Dwelling" (Threshold Condition)

Israeli law stipulates that a landlord cannot rent out a "warehouse with a mattress" as a residential apartment. An apartment is considered unfit for habitation (and prohibited from being rented) if it lacks any of the following conditions:

• A properly functioning drainage and sewage system (including a toilet).
• Lighting and windows for ventilation.
• A functioning and active electrical system.
• Lockable entrance doors (minimal protection).
• Running hot and cold water supply and a designated space for cooking.
• Size of the leased property: At least 26 sq.m. (designed to limit pirate division of apartments into capsules, although there are exceptions depending on prior permits).

If a contract is signed for an apartment that does not meet these conditions, the tenant is entitled to cancel the contract immediately without penalty.

2. Allocation of Payments (What is allowed to be charged to the tenant?)

The Fair Rental Law created absolute order regarding what the tenant must pay (and primarily – what is forbidden to demand from them):

Payments allowed to be charged to the tenant:

1. Rent.
2. House committee dues (current management fees) / external management company in the building.
3. Arnona (municipal property tax), water, electricity, and gas bills.

Payments that apply exclusively to the landlord (forbidden to charge the tenant):

1. Brokerage fees: If the property owner invited the broker to market the project/apartment, they cannot force the tenant to pay the broker's commission (usually one month's rent). Only if the tenant came on their own initiative with a broker on their behalf, the tenant will pay them.
2. Payments for building insurance of the apartment (the tenant may, but is not obliged to, obtain their own contents insurance).
3. Municipal betterment levies or renovations by the house committee in the building (for example, installing a new elevator or tarring the roof), as this is an increase in the property value of the apartment owner see detailed info.

3. Contract Extension (Option) and Advance Notice

Similar to European markets, the accepted method in Israel is "12 months with an option for 12 additional months".

• The law stipulates that if the tenant has an 'option' to extend, the landlord and tenant can cap the rent increase in the option year by the CPI Index or a certain predetermined percentage.
• If no option was agreed upon in advance, and both parties possess the "right of cancellation" of the ongoing contract: The landlord must give advance notice of at least 90 days, while the tenant must give notice of only 60 days. The law acts in favor of the tenant to allow them time to find an alternative.

Automate Residential Properties with Landager

Israeli management is full of "post-dated physical checks" and promissory notes decaying in drawers, while the Fair Rental Law sets clear boundaries (guarantee limits, overlapping building insurances). The Landager app for the Israeli landlord fully digitizes the contract: Receipt of payment (first month's rent and Arnona) is processed via credit card and/or direct debit authorization, contracts are updated with the law amendment, and all "repair" requests from tenants are categorized by status (whether the fault is at the owner's expense - e.g., a gas/AC bug, or under the tenant due to unreasonable use). Sending an extension proposal (option) 90 days before the contract ends is done automatically via WhatsApp/SMS notification.

Read our additional guides:

• Rules for Guarantees and Deposits (Promissory Note / Bank Guarantee)
• Eviction Claim (Expedited process against a recalcitrant tenant)
• Ancillary Duties and Registrations (Arnona to tenant's account)
• Rent Increases and Indexation (Consumer Price Index)
• Maintenance Obligations: What falls on the Landlord and Tenant?
• Arrears and Late Fees (Agreed delay penalties)