The security a native produces with one phone call
An Israeli tenant supplies two guarantors by phoning a relative. You landed with an empty Israeli credit file, no Israeli payslips and nobody holding a תעודת זהות (Teudat Zehut) who can sign for you, so the landlord asks for money instead. The real question is which instrument freezes the least of your landing capital.
General information, not advice
Why does a landlord ask you for security a native never has to give?
Because every ordinary screening signal is missing on you, and the landlord replaces what he cannot check with something he can hold. The Israeli credit-data system run by the Bank of Israel is built from obligations reported by lenders, banks, credit-card companies and non-bank credit providers8. If you have never borrowed in Israel, there is nothing to report, so your file is empty rather than bad. Empty is not neutral to a landlord; it is unreadable.
Your home-country score does not travel, and it cannot be imported. You can order your own Israeli data report free once per calendar year through the Bank of Israel system89, and it is worth doing early so you know what a landlord or bank will see. Expect it in Hebrew or Arabic; English is not one of the report languages8, so budget for a translation or a Hebrew-reading friend.
Which instruments will a landlord accept, and what does each oblige you to?
Five, and they differ far more in what they cost you than in what they give him. The landlord sees five roughly equivalent ways to be made whole. You are the only party for whom the choice between them is worth thousands of shekels.
| Instrument | Cash frozen | Bank fee | Hard for a new oleh? | What the landlord can claim against it | How you get it back |
|---|---|---|---|---|---|
| Cash deposit (ערבון (Erbon)) | The full sum, held by the landlord personally | None | Easiest. It needs money, not a credit history | Unpaid rent with contractual linkage and interest, the cost of repairs you owe, and a contractual sum for failing to vacate2 | Within 60 days of handover or of your debts being settled, whichever is later, plus any profit he made on it1 |
| Bank guarantee (ערבות בנקאית) | The full sum, blocked by your bank inside your own account3 | Yes, a commission per your bank's tariff3 | Hard in month one. The money must already be in the account | The same three grounds, claimed in writing from the bank2 | The document comes back within 60 days, then the bank releases the block3 |
| Security cheques (שיק ביטחון) | Nothing frozen | None | Hard. The bank must open your account but need not give a new customer a chequebook6 | Deposited like any cheque; if it bounces, the Execution Office5 | Cheques handed back. You can instruct the bank to cancel, though your contract may treat that as a breach5 |
| Promissory note (שטר חוב) | Nothing frozen | None | Easiest of all. Paper and signatures | The sum written on it, with no statutory ceiling, via the Execution Office4 | Returned within 60 days; a refusal means a written demand, then court4 |
| Personal guarantors | Nothing of yours | None | Hardest. It needs Israelis willing to sign | Enforced by suing the guarantor in court2 | Nothing to return. The exposure ends with the obligation it was signed for7 |
What does each one actually cost you?
The cost is the capital, not the fee. A bank issues a guarantee only if the sum is available in your account, then sets that money aside for as long as the guarantee is live; the document is treated as the equivalent of cash, cannot be cancelled once issued, and losing it is losing money3. On top of that sits a commission set in your bank's published tariff, and the Bank of Israel banking-fee information for the public is where you compare tariffs before you commit10.
A cash deposit costs no fee and freezes exactly as much. The difference is who holds it: a private landlord rather than a scheme. And the number that catches olim is the return window. Your money comes back within 60 days of you handing the apartment over, or of your debts being settled, whichever falls later12. If your first Israeli lease is a short landing lease, you will need a second deposit before the first one has come home.
A worked example: London deposit, Tel Aviv deposit
Take a flat you rented in the UK at £1,500 a month, and a flat in Israel at 6,000 ILS a month on a 12-month חוזה (Chozeh).
- The UK side. Annual rent of £18,000 is below the £50,000 threshold, so the deposit was capped at five weeks' rent, about £1,730, with a holding deposit capped at one week13. It had to go into a government-approved protection scheme within 30 days, and it came back within 10 days of you both agreeing the figure12.
- The Israeli side. The ceiling is the lower of the rent for one third of the term, which is four months or 24,000 ILS, and three months' rent, which is 18,000 ILS. The lower figure wins, so the cap is 18,000 ILS1. No scheme holds it, and the return window is 60 days rather than 10112.
Roughly three months' rent against five weeks, held by a person rather than a custodian, and returned six times more slowly. That is the gap you are budgeting for, and it lands in the same month as your shipping, your appliances and your פיקדון (Pikadon) at the utilities. Shorten the lease and the ceiling drops with it: on a six-month lease the one-third limb is two months, so the cap becomes 12,000 ILS rather than 18,0001.
How much security is a landlord allowed to demand?
For a residential lease, the securities that cost you money are capped together at the lower of the rent for one third of the lease term and three months' rent1. The cap applies where the lease runs longer than three months or can be extended, does not exceed ten years or can be ended earlier by the landlord, the monthly rent is not above 20,000 ILS, landlord and tenant are not relatives, and the property is not a hotel or holiday let, a supervised institution, sheltered housing, student or worker accommodation, or a protected tenancy1.
Here is the part almost nobody explains to a newcomer. The ceiling bites only on securities that cause you a monetary expense, such as a cash deposit, a bank guarantee, or a guarantee from a credit or insurance company1. Handing over a security cheque or a promissory note costs you nothing, so no statutory ceiling applies to the sum written on either45. The instrument that is cheapest to give is the one with no legal limit on the number.
The law also limits when the landlord may cash in. He must give reasonable advance notice and a reasonable chance to put the problem right, and he may realise the security only for unpaid rent, for the cost of defects you were responsible for repairing, or for a contractual sum if you did not vacate on time2. Those terms bind both sides and cannot be contracted away against you, with one carve-out worth knowing: where landlord and tenant are family, other terms may be agreed2. Plenty of olim take a first flat from a cousin, so read that clause rather than assuming the protection travels.
Is any of this taxable, in Israel or back home?
Israeli treatment
A security is not a payment, and it does not stop being your money when the landlord holds it. The law requires it back within 60 days of handover or of your debts being settled, whichever is later, together with any profit he earned on it, such as interest from a savings plan12. Israeli tax on rental income is the landlord's side of the transaction, not yours, and Meidahon covers it separately.
Home-country treatment
For US citizens and green-card holders, money does not stop being reportable because a bank blocked it. If the aggregate value of your non-US financial accounts exceeded $10,000 at any point in the calendar year, FinCEN Form 114, the FBAR, is due on 15 April with an automatic extension to 15 October14. Landing capital parked for a deposit, or sitting blocked behind a bank guarantee, is in an Israeli account and counts toward that aggregate. UK, Canadian, South African, Australian and French olim generally end home-country tax residence under their own residence rules and carry no equivalent annual account report.
What the treaty does and does not do
The US-Israel income tax treaty allocates taxing rights over income between the two countries15. It does not touch the FBAR, which is a reporting obligation rather than a tax14, so no treaty position removes the report. And a scope note, because US olim are right to ask: this article names no pooled investment vehicle at all, so PFIC does not arise here. It arises the moment the same landing capital goes into an Israeli fund instead of a landlord's hands, which Meidahon covers in the investing section.
What actually works when nobody can sign for you?
Rank the options by how much of your landing capital each freezes, then offer the cheapest one that answers the landlord's real worry, which is next month's rent rather than your net worth.
- An employer letter or signed contract, first. It freezes nothing and it addresses the actual fear. Where you have no Israeli employer yet, documented ongoing foreign income plus statements showing it landing in your Israeli account does similar work.
- A promissory note. No cash frozen, no fee, and easy for a newcomer to provide. The trade is that no statutory ceiling applies, so negotiate the figure down in writing and pin the return terms4.
- Security cheques, once your bank issues a chequebook. Also uncapped, so agree the amount in the contract, and mark them למוטב בלבד so they cannot be passed on to a third party5.
- A guarantor who is an Israeli relative of your spouse. This is the ordinary Israeli answer and it works, but the person signing is a regular guarantor, the class with the fewest statutory protections, because the extra ones attach where the creditor's business is lending and a landlord's is not7. Cap the sum in the guarantee document and tie it to the original term: a regular guarantor is liable only up to a stated limited amount and is not bound by a later increase agreed between landlord and tenant7.
- A larger cash deposit, inside the ceiling. Freezes the most, and the easiest to obtain, because it is what an agent accepts without discussion. It is the answer that costs you the most and the conversation the least.
- A bank guarantee, once the account is funded and a few months old. Same frozen capital as a deposit, plus a commission, and in exchange the landlord gets an instrument he trusts more310.
- Prepaid rent, last. Prepaid rent is rent, not a security, so the ceiling does not reach it and you have spent the leverage of paying monthly. Note also that rent assistance for olim from the Ministry of Construction and Housing starts automatically from the seventh month after aliyah for those who made aliyah on or after 1 March 2024, and runs to month 3011, so committing a full year up front ties up cash in months when part of the rent would have been covered.
What newcomers get wrong
- Treating three months as the rule. The ceiling is the lower of three months' rent and the rent for one third of the term, so a short lease has a smaller ceiling, not the same one1.
- Assuming the ceiling covers everything you sign. It counts only the securities that cost you money. The cheque and the note you hand over for free sit outside it15.
- Expecting the deposit back at handover. Up to 60 days, or until your debts are settled, whichever is later1.
- Assuming a chequebook comes with the account. The bank must let you open an account, and must decide within 10 business days, but it is not obliged to provide credit-linked services such as a chequebook or a credit card6.
- Signing several securities without adding them up. A landlord may ask for more than one, and the ones that cost you money count together against the single ceiling1.
Knowledge Check
You are signing a six-month lease at 5,000 ILS a month. The landlord asks for a bank guarantee. What is the maximum he may demand in securities that cost you money?
Two limbs, and the lower one wins.
Before you sign
An oleh is asked for security a native supplies with one phone call, because the Israeli credit file starts empty rather than bad, there are no Israeli payslips yet, and nobody holding a teudat zehut can sign as guarantor. Five instruments are in play: a cash deposit, a bank guarantee, security cheques, a promissory note, and personal guarantors. For a residential lease, the securities that cost you money are capped together at the lower of three months' rent and the rent for one third of the lease term, so a shorter lease carries a smaller ceiling. A security cheque and a promissory note cost you nothing to give, which is precisely why no statutory ceiling applies to the sum written on them. Rank the options by how much of your landing capital each freezes: an employer letter and a capped promissory note freeze nothing, a cash deposit or a bank guarantee freeze the full sum, and the deposit only comes back within 60 days of handover or of your debts being settled, whichever is later.
For a residential lease meeting the statutory conditions, the securities that cost you money are capped together at the lower of the rent for one third of the lease term and three months' rent. The conditions include a term longer than three months, no more than ten years, monthly rent not above 20,000 ILS, and parties who are not relatives.
No, and this is the trap. The ceiling applies only to securities that cause you a monetary expense, such as a cash deposit, a bank guarantee, or a guarantee from a credit or insurance company. Handing over a security cheque or a promissory note costs you nothing, so no statutory ceiling applies to the amount written on either one.
Because the Israeli credit-data system is built from obligations reported by lenders, and if you have never borrowed in Israel there is nothing in your file. Empty reads as unreadable rather than good, and your home-country score cannot be imported. A signed employment contract or documented ongoing foreign income often answers the same worry without freezing capital.
The full sum, blocked inside your own account for as long as the guarantee is live, plus a commission set in your bank's published tariff. The document is treated as the equivalent of cash, cannot be cancelled once issued, and losing it is losing money. In your first months in Israel it is the most expensive answer available.
Within 60 days of the date you returned the apartment, or the date your debts were settled, whichever is later, together with any profit the landlord made on the money. Plan for it: if you are moving from a short landing lease into a longer one, you will usually need the second deposit before the first has been returned.
No. He must give reasonable advance notice and a reasonable opportunity to put the problem right, and he may realise the security only for unpaid rent with contractual linkage and interest, for the cost of defects you were responsible for repairing, or for a contractual sum if you failed to vacate on time.
Cap the amount in the guarantee document and tie it to the original lease term. A guarantor for a landlord is a regular guarantor, the class with the fewest statutory protections, because the stronger protections attach where the creditor's business is lending. A regular guarantor is liable only up to a stated limited sum and is not bound by a later increase agreed between landlord and tenant.
The deposit itself is not investment income, and no pooled fund is involved, so PFIC does not arise. What does apply is account reporting: if your non-US accounts exceeded $10,000 in aggregate at any point in the year, FinCEN Form 114 is due, and landing capital parked for a deposit or blocked behind a bank guarantee counts toward that total.