Consolidation and Reallocation: When Someone Else Redivides Your Land
Consolidation and reallocation is a planning process that merges parcels into a single area and divides it again into plots. It can be carried out without the owners consenting, and it changes what each of them holds. This guide sets out the rule that is meant to protect you, the balancing payments, and the limit the courts have placed on the authority.
What the process is
The process usually has two stages. In consolidation, all the parcels within the plan area are merged into a single area. In reallocation, that area is divided again into plots under the new plan, alongside the fixing of land designations and building rights.
What comes out at the end is not necessarily what went in. A plot can change position, shape, area and designation. What is meant to be preserved, under the statutory rule, is the relative value, not the boundaries and not the location.
A distinction worth holding through this page: consolidation and reallocation is the planning process, and parcellation is the registration that follows it. The first settles what each owner is entitled to, the second carries it into the land registry. More on this at Parcellation.
Why the authority does it
The case law describes two central purposes. The first is a planning purpose: where the existing division does not allow efficient development, consolidation and reallocation make it possible to order the area afresh. The second concerns allocating land for public purposes within the area, such as roads, open spaces and public buildings.
The second purpose is where the risk to a landowner sits. In HCJ 4914/91 Irani v Minister of the Interior it was held that a reallocation imposed by the local committee on the owners is a legitimate way for the committee to take land for itself, even where it is used in order to obtain the land it needs for public purposes without expropriation, and therefore without paying expropriation compensation.
The case law has summed it up in these words (in free translation):
“The reparcelling mechanism is meant to serve two central purposes: first, it serves planning needs where a more efficient division of the parcels within a given area is required, to fit the division to the planning needs. Its second purpose is a just distribution of the damage and the betterment among the owners of land within a plan’s boundaries.”
HCJ 9402/03 Buchnik v. National Planning and Building Council
This is where a landowner loses without noticing. Land set aside for public purposes within a reallocation plan carries no expropriation compensation. The compensation, so far as it exists, is embodied in the value and the building rights of the plot allocated. If they are not enough, the stage at which that can be said is while the plan is still open, not after it has been approved.
With consent and without
The law recognises two routes, and they differ sharply in what remains available to the owner:
- Reallocation with the owners consent. The owners themselves initiate the new division and file a detailed layout with the committee: the parcel numbers, their areas, their boundaries and the access ways to them. The committee may impose further conditions for its approval.
- Reallocation without the owners consent. The authority initiates the plan, and it applies to an owner who objects as well. On this route binding allocation rules apply, and they are the subject of the next section.
And what if the consent is partial? It may be that all the owners agree only as to part of the plan area. In such cases, to narrow the points of dispute, the plan is sometimes divided into two sectors: in one sector the plan proceeds with the owners’ full consent, and in the other without consent, with the statutory protections applying to it.
What this means in practice: the absence of consent does not stop the plan. What it does do is bring the statutory protection mechanism into play, and open the way to an objection and an appeal.
The allocation rule and balancing payments
In a plan made without consent, the law lays down binding allocation rules. These are the main ones:
- Preserving relative value. The value of the new plot allocated to an owner, relative to the value of all the new plots, is to be as far as possible the value of his previous plot relative to the value of all the previous plots.
- Balancing payments. Where full proportionality cannot be preserved, an owner whose new plot is relatively lower in value is entitled to receive the difference from the local committee, and an owner whose new plot is relatively higher in value is obliged to pay it to the committee.
- Who decides. The planning institution competent to approve the plan decides whether and to what extent proportionality, or proximity to the previous plot, could be preserved. It may refer the decision on rights to an arbitrator agreed between the plot owners and the committee. Failing agreement, the arbitrator is appointed by the chair of the appeals committee in consultation with the chair of the district committee.
One more tax point worth knowing: equalisation payments received in a reparcelling procedure are treated as a “realisation of rights” in the land, so their recipient is charged betterment levy on them.
Two practical points worth absorbing. First, the whole mechanism rests on valuation, so the real argument is almost always a valuation argument before it is a legal one. Second, a balancing payment can fall on you and not only in your favour. An owner who discovers he owes a payment to the committee usually discovers it too late.
The limit the courts set
The Irani judgment is not the end of the story, and this is the point most often missed. Later case law narrowed the committee power considerably, holding that consolidation and reallocation is a planning tool, and cannot be used to allocate public areas that have no direct planning connection to the area itself.
From this came the distinction that has formed between kinds of public need:
- A local or regional need with a direct connection to the area, such as a neighbourhood public garden or a road serving the plots themselves, may be included in the plan.
- A national need, for example land intended for a country wide infrastructure project, cannot be funded through this mechanism at the expense of the landowners in the area.
The starting point of the doctrine was stated in the Irani case itself (in free translation):
“Under section 26 of the [Planning and Building] Law, the local committee is empowered to vest land in itself both by expropriating it and ‘in another way’. It has already been held that a reparcelling procedure imposed by the local committee on the landowners is a legitimate ‘other way’ of vesting the land in itself; and it may use such a procedure even where its use is aimed solely at carving out of the land the ground it needs for public purposes, while avoiding an expropriation that carries compensation.”
HCJ 4914/91 Irani v. Minister of the Interior
What this means in practice: the argument that the land set aside does not serve the area but a far wider need is a real legal argument and not a feeling. But it is made in an objection and an appeal, while the plan is still open, and not after it has been approved.
What can be done
The order of steps that works, from the most important down:
- Read the allocation table and the valuation annex, not only the layout. What settles what you receive is there, not in the colours on the map.
- Commission an independent valuation. The valuation that accompanies the plan was prepared for the party who filed it, and it is the starting point rather than the conclusion.
- File an objection in time, and ground it in figures and in defined planning arguments.
- Appeal the decision within the periods fixed by law.
- Consider the arbitration route on the question of rights, in cases where it is open.
What is almost always too late: coming forward after the plan has been approved and asking for the allocation to be changed. At that stage what usually remains is a monetary argument, not a planning one.
More on this at Appeals in the planning system and Diminished property value claims.
Every case is examined on its own facts. For a consultation with a lawyer from the real estate department call 02-5953322, send a WhatsApp message to 050-4411343 or leave your details in the form below, and we will get back to you as soon as possible.
What people ask most often
Can a reallocation I object to be prevented?
Part of my land was set aside for public purposes. Am I entitled to compensation?
What is a balancing payment, and who pays it?
Which matters more, the layout or the allocation table?
Can the authority set aside land for any public need?
All Real Estate Department pages
If a reallocation plan has been published over your land
Send us the plan number and the allocation table, and the valuation annex if you have it. That is where what matters sits. The arguments can be grounded while the plan is still open, so the timing matters as much as the content.