Can I buy into an Israeli sheltered housing residence from the UK, and is my deposit protected?

The brochure quotes a deposit of NIS 2.4 million and a monthly fee, and the couple reading it in Hertfordshire want to know one thing: if this goes wrong, who owes them the money back. Israeli sheltered housing is one of the few Israeli property-like commitments a non-resident can enter without owning anything at all. You are not buying an apartment. You are handing a private operator a very large refundable deposit, and the whole question is what stands behind it.

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Detailed Answer

The Sheltered Housing Law 2012 (Hok HaDiur HaMugan) regulates the operator, not the resident, so there is no citizenship or residency condition on who may move in. Section 2 makes it an offence to run a sheltered housing facility without a licence, which is issued and supervised by the Supervisor (HaMemuneh) at the Ministry of Welfare and Social Affairs, and the register of licensed facilities is the first thing to check on any residence you are considering. Section 16 requires a written contract and Section 17 requires a detailed disclosure document handed over before signing, in the resident's own language or with a translation provided by the operator. That translation right matters more than it sounds: it means an English-speaking resident is entitled to the terms in a language they read, not a Hebrew contract and a summary. Section 18 gives the first three months the status of a trial period, in which either side may end the arrangement on two weeks' written notice, and after that the resident may leave on three months' notice.

The deposit (pikadon) is the exposure, and Section 27 is the answer to it. An operator may only take deposit money if it has put one of four securities in place: a first mortgage registered over the property, a bank or insurer guarantee, transfer of 40% of the money to a trustee under a trust agreement, or another security approved by the Minister. Ask which of the four applies before you transfer anything, and ask for the document. On the way out, Section 28(a) requires the deposit to be returned on termination or on vacating, Section 28(b) allows the operator to retain no more than NIS 10,000 against unpaid resident obligations, and Section 28(d) requires the repayable sum to be index-linked between payment and refund. What the statute does not do is cap the contractual write-down. Most contracts erode the refundable portion by a set percentage for each of the first several years of residence, and that clause, not the law, is where most of the money is lost. Read it before you sign, because it is negotiable and the deposit security provisions are not.

In Practice: Under Section 27 of the Sheltered Housing Law 2012 an operator may take a deposit only against one of four securities, and the licence sits with the Supervisor (HaMemuneh) at the Ministry of Welfare and Social Affairs. On departure Section 28(b) limits the operator's retention to NIS 10,000, and where the resident dies in residence Section 28(c) requires the balance to be paid to the heirs within 30 days of them producing the probate documents. On a NIS 2.4 million deposit, the difference between a bank guarantee and a bare contractual promise is the whole of the family's exposure.

For a British family the friction sits at both ends. Signing from abroad usually means a notarised and apostilled power of attorney to an Israeli lawyer so contracts, the disclosure document and the deposit transfer can be handled without flying out, and the money itself has to clear Israeli anti-money-laundering checks on a large incoming sterling transfer, which the bank will want documented as the proceeds of a UK property sale or pension drawdown. Health cover is the trap. Sheltered housing is not nursing care and it is not a medical facility, so a resident who is not in an Israeli kupat holim is paying privately for everything from a GP visit upwards, and a move into genuine nursing care means a different, separately licensed institution altogether. Our answer on the UK State Pension when you live in Israel covers the income side of the same move. On death, the repayable deposit is a debt owed by an Israeli company to your estate: it is a foreign asset within the scope of UK inheritance tax if you remain UK-domiciled, and Section 28(c) will not release a shekel to your children until they hold an Israeli succession order, which is a separate process taking months from London.

When to Consult a Lawyer

• The contract's annual write-down of the deposit is the real cost of the arrangement. On a seven-figure deposit a two-point difference in the erosion clause outweighs several years of monthly fees, and it is negotiated before signature or not at all.
• The operator cannot show you which Section 27 security is in place. Sheltered housing operators have failed in Israel, and residents who could not identify their security were the ones who lost money.
• You are signing by power of attorney from abroad. The instrument has to be drawn widely enough to cover the contract, the deposit transfer and later variations, or your lawyer will be sending you documents to re-execute every few months.

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Speak With an Israeli Attorney

The deposit clause and the security behind it are where a sheltered housing contract is won or lost, and both are settled before you sign. We check the operator's licence and Section 27 security, negotiate the refund and erosion terms, and structure the arrangement so your family in the UK can recover the deposit without an avoidable Israeli court fight.

Contact us for a confidential initial consultation.