Buying an apartment during the construction stage — often called buying "on paper" or directly from the developer — can seem like a convenient way to secure a brand-new apartment in sought-after Netanya projects, such as Shirat HaYam, Park HaYam or the newer stages of Agam 3.
Against the background of the Bank of Israel's interest rate reduction to 3.75%, developers are beginning to reduce aggressive offers such as "pay 15% now and the balance upon key delivery," as buyer activity in the market gradually starts to recover.
However, behind attractive renderings and marketing materials, there are very Israeli legal and financial risks that can increase the final cost of the transaction by hundreds of thousands of shekels.
Financial Traps and Hidden Costs When Buying from a Developer
At the time of signing the contract with the developer, the apartment price may look fixed and clear. In practice, the final cost of the apartment at key delivery can be higher than the initial contract price.
1. Construction Input Index
The Construction Input Index is one of the most significant additional cost factors when buying an apartment from a developer in Israel.
This index reflects increases in the cost of concrete, steel, logistics and labor. Developers often link the unpaid balance of the apartment price to this index.
For example: if you paid 20% of the apartment price, and the remaining 80% is due in 3 years, that unpaid 80% may continue to increase according to changes in the construction index.
2. Sale Law Guarantees
In Israel, a developer is not allowed to receive your money into a regular private account.
All payments must be made through official bank payment vouchers into the closed project escrow account managed by the financing bank. For every shekel paid, the bank issues a guarantee under Israel's Sale Law.
If the construction company collapses, the bank is expected to return your money according to the guarantee.
Risk Table When Buying from a Developer
Risk Table When Buying from a Developer — Netanya 2026
| Risk Factor | How It Works in Practice | Legal Protection Method |
|---|---|---|
| Linkage to the Construction Input Index | Can increase the final cost of the unpaid balance by around 2–4% per year. | Negotiate full or partial index protection before signing the contract. |
| Bypassing the Sale Law | The developer asks for a "seriousness fee," advance payment or upgrades outside the official bank vouchers. | Refuse. Any payment not made through the official escrow account is not insured by the bank. |
| Limited basic technical specifications | The basic specification — kitchen, doors, flooring — may be very minimal. Upgrading to a higher standard can be expensive. | Agree and document upgrades before signing the contract. |
| Developer lawyer's fee | A mandatory fee, around 5,000 ₪ + VAT, for property registration. | Understand that this lawyer represents the developer only. You need your own lawyer. |
Developer contracts in Israel are written by legal departments and naturally protect the interests of the construction company first.
Over 25 years in the Israeli real estate market, I have guided hundreds of successful transactions in Netanya. I know which clauses developers in Ir Yamim or Agamim may be willing to negotiate, and how to handle discussions around Construction Input Index protection or upgrades to the technical specifications.
Planning to Buy an Apartment from a Developer in Netanya?
Call Inna✓ Advantages
- +Flexible payment schedules: It may be possible to enter the transaction with only 15–20% equity, while the remaining balance is paid over 2–3 years during construction.
- +Potential price gap before completion: An apartment purchased at the excavation or early construction stage may be priced 10–15% below a comparable completed apartment in the same area at delivery.
- +Modern building standards: A spacious mamad — the reinforced security room required in newer Israeli apartments — underground parking, a storage room and energy-efficient systems are part of the standard in many new projects.
✗ Disadvantages
- −Capital lock-up and double costs: While paying for an apartment under construction, you may also continue paying rent for your current home for 2–4 years.
- −Risk of delivery delays: Even large developers sometimes postpone delivery dates due to logistical problems or labor shortages.
- −The finished product is still theoretical: In practice, you are buying a plan. The real view from the window, natural light and neighboring environment can only be fully assessed after construction is complete.
Frequently Asked Questions
What delivery delay is allowed by law?+
Under Israeli law, a developer may delay apartment delivery by 60 days without paying compensation. From the 61st day of delay, the company is required to pay monthly compensation equal to 150% of the average rent for a similar apartment in the same area of Netanya.
Do I have to take a mortgage immediately when signing a 20/80 contract?+
No. If the payment schedule says that 80% of the apartment price is due only upon key delivery, after Form 4 is received, the mortgage can often be taken closer to the end of construction. However, given the current interest rate environment of 3.75%, it is still important to receive preliminary mortgage approval from the bank in advance, so you understand your real financing limits.
Can I sell an apartment bought from a developer before the building is completed?+
Yes. This is usually called an assignment of rights or a resale of rights in a developer project. However, most developer contracts restrict resale before a certain construction stage, or charge a fee for approving the transfer of rights — usually 1–2% of the transaction value. Your lawyer should try to soften these conditions during the contract negotiation stage.
What is Form 4 and when can I move into the apartment?+
Form 4 is the official municipal approval allowing a new building to be connected to infrastructure — water, electricity and gas. It confirms that the building is safe and suitable for residential use. Renovation work, bringing in furniture and moving into the apartment are allowed only after the developer has received Form 4 and handed over the keys according to the delivery protocol.
Before buying real estate, it is important to understand not only the apartment price, but also all the additional transaction costs. I help buyers calculate the budget and expected tax burden in advance.
Still Have Questions About Developer Purchase Contracts?
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