Updated: November 2026 · e-land editorial team
Disclaimer: The information in this article is general, correct as of the update date, and does not constitute legal, tax or investment advice. Before joining a purchasing group, consult a lawyer specializing in real estate.
Not sure about a term? See our real estate glossary.
What if, instead of buying an apartment from a developer, you bought the land together with other families, built the building on it, and the profit that would have gone to the developer stayed with you? That is the idea behind purchasing groups, and thanks to it thousands of Israeli families have received a new apartment, designed to their taste, at a lower price than they would have paid a developer.
The secret is choosing a group that is run properly. This guide explains where the savings come from, what the advantages are, when it is especially worthwhile, and what you must check before joining.
What is a purchasing group?
A purchasing group is an association of private individuals who jointly buy land and build a residential building on it for themselves. Instead of buying a finished apartment from a developer, the group members are the developers.
Legally, the transaction consists of two separate stages:
- Buying the land: each member buys a share of the land from its owners.
- Ordering construction services: the group contracts with a building contractor who builds for it.
The members sign a co-ownership agreement that sets out each member's rights and obligations, the allocation of apartments and decision-making. In most cases the group is accompanied by an organizer who located the land, recruited the members and manages the project for a fee.
Where do the savings come from?
- No developer's profit. This is the main source. In a regular project, the developer prices the apartments so that a profit remains. For illustration, in urban renewal projects the Government Chief Appraiser set a minimum developer's profit of 16%–17% in December 2025 (source, Hebrew). In a purchasing group, that profit, less the organizer's fee, stays with the members.
- Savings on the developer's marketing and financing costs.
- A low land price, especially when joining at an early planning stage. This is also the source of risk, so it is important to check the planning status (see below).
The actual savings vary from project to project. They depend on the land price, the organizer's fee, construction costs, and whether there were overruns. It is therefore worth comparing the expected price with a similar apartment from a developer, based on an independent feasibility report ("zero report").
What about taxes?
In the past, part of the savings came from paying purchase tax on the land only. Following Amendment 69 to the Real Estate Taxation Law, in a group with an organizer purchase tax is today usually calculated according to the value of a finished apartment (source, Hebrew). In addition, full VAT is paid on construction services. It is therefore advisable to obtain a tax opinion for the specific project (see also our purchase tax guide).
The advantages of a purchasing group
- A lower price: without the developer's profit, the final price of the apartment may be significantly lower than a similar apartment from a developer.
- An apartment designed for you: members take part in decisions on design, specifications and materials. The apartment can be adapted at the planning stage, rather than paying for "tenant changes" afterwards.
- You choose your neighbors: a community that forms from the very first stage, often of families with similar needs.
- Land ownership from day one: your share of the land is registered in your name, and it is a real asset even before the building stands.
- Cost transparency: in a properly run group, members see where every shekel goes, thanks to a trust account, a zero report and ongoing reporting.
- Appreciation along the way: if the project progresses as planned, the value of the rights may rise with each approved planning stage.
When is it especially worthwhile?
A well-managed purchasing group can be one of the best ways to buy a new apartment. The chances of success are higher when:
- The land has an approved plan, and ideally already a building permit.
- The organizer has completed projects, and you can talk to members of previous groups.
- The money is deposited in a trust account, with bank financing support.
- All members have deposited their equity before the land is purchased.
- There is an independent zero report with a reserve for overruns.
What to know before joining
The advantages come with responsibility. In a purchasing group you are the developers, so it is important to understand the differences from buying from a developer:
- No Sale Law protection: when buying from a developer, the law requires it to provide security, usually a bank guarantee, for the money you paid. In a genuine purchasing group, this law usually does not apply. That is why the trust account and bank support are so important.
- The final price is not fixed in advance: cost increases, authority requirements and levies fall on the members. A reserve in the zero report provides a safety margin.
- Time: if the land is bought before planning is complete, delays are possible. The more advanced the planning stage, the greater the certainty.
- Joint decisions: a good co-ownership agreement, with an exit mechanism and an elected representative committee, prevents disputes and delays.
- Choosing the organizer: the collapse of Inbal Or's company is the well-known example of the damage an unreliable organizer can cause (source, Hebrew). To the best of our knowledge, as of writing there is no dedicated, comprehensive law regulating purchasing groups, so your own due diligence is the main protection.
A purchasing group, or development in disguise?
Not everything marketed as a purchasing group really is one. In some cases a company is in effect selling apartments but presents it as a purchasing group to avoid the obligations of the Sale Law. The Sale Law Supervisor at the Ministry of Construction and Housing has set out warning signs for such situations, and has even imposed financial sanctions on companies that operated this way (source, Hebrew). Signs to watch for: a fixed "final" apartment price, money transferred to the organizer's account rather than a trust account, and members who have no influence over decisions.
Purchasing groups abroad: the Israel Securities Authority has in the past examined whether an approach to the Israeli public to join a purchasing group abroad may be considered a public offering of securities. Such a venture requires special legal review.
Checklist: 8 checks before joining
- Planning status: Is there an approved zoning plan? A building permit? The earlier the stage, the higher the risk.
- An independent zero report covering all costs, including taxes, levies and a reserve for overruns.
- Trust account and bank support: the money is deposited in a trust account and released only under defined conditions.
- Full equity from all members deposited before paying for the land.
- Who the organizer is: experience, completed projects, and exactly how they earn.
- An independent lawyer on your behalf, who reviews the co-ownership agreement.
- Exit mechanism: what happens if you want to leave, or if another member does not pay.
- Transparency: ongoing reporting to members, an elected committee and the right to inspect documents.
The bottom line
A purchasing group is a way to get a new apartment, designed for your needs, and keep the profit that usually goes to the developer. Those who choose a group with an approved plan, an experienced organizer, a trust account and a proper zero report enter a calculated transaction with real savings potential. Those willing to invest in checking in advance, and who have flexibility in time and budget, will find a significant opportunity here.
e-land publishes projects and property listings. If you are considering joining a purchasing group, use the checklist above before any commitment.
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Not sure about a term? See our real estate glossary.
Disclaimer: The information in this article is general, correct as of the update date, and does not constitute legal, tax or investment advice, nor a recommendation to join any specific group. It contains no promise of savings or returns. Before joining a purchasing group, consult a lawyer specializing in real estate. This English version is provided for convenience; in case of any discrepancy, the Hebrew version prevails.
Sources
- Nadlan Center, on the minimum developer's profit set by the Government Chief Appraiser (December 2025, Hebrew): link
- Calcalist, "The guide to setting up a purchasing group" (Hebrew): link
- Calcalist, "What to know before joining a purchasing group?" (Hebrew): link
- Walla, on bank financing for purchasing groups (Hebrew): link
- Bizportal, on Amendment 69 and purchase tax in purchasing groups (Hebrew): link
- Duns 100, "Purchasing group or development in disguise" (Hebrew): link
- Behadrei Haredim, on a sanction by the Sale Law Supervisor (Hebrew): link
- Arutz 7, on the bill to protect purchasing group members (Hebrew): link
- Israel Securities Authority, staff positions database (purchasing group in the US, Hebrew): link
