I'm a foreign national. Can I buy property in Iceland? Skip to content
iceland real estate
Golli
Q

I’m a foreign national. Can I buy property in Iceland?

A

The short answer is yes, but there are many conditions and caveats to consider. It’s also worth noting that due to a growing population, the volcanic eruptions on the Reykjanes peninsula (which have displaced Grindavík residents), and rising post-COVID interest rates, Iceland is currently experiencing a housing crisis. So, for potential buyers, it may not be the most economical (or ethical) time to buy property in Iceland.

Who can buy property in Iceland?

Briefly, foreign residents with a legal domicile in Iceland are eligible to buy property in Iceland.

The relevant section from the Act on the Right of Ownership and Use of Real Property states:

No one may acquire the right to own or use real property in Iceland, including fishing and hunting rights, water rights or other real property rights, whether by free assignation or enforcement measures, marriage, inheritance or deed of transfer, unless the following conditions are met:

1. In the case of an individual, he shall be an Icelandic citizen or have domicile in Iceland.

2. If several individuals are involved in a company, and each bears unlimited liability for the debts of the company, they shall all be Icelandic citizens or shall have been domiciled in Iceland for at least five continuous years.

3. In the case of a company in which some members bear unlimited liability, and others only limited liability, for the company}s debts, all those who bear unlimited liability shall be Icelandic citizens or shall have been domiciled in Iceland for at least five continuous years.

4. In the case of a company in which none of the members bears unlimited liability for the company}s debts, or an institution, the company or institution shall have its domicile and venue in Iceland and all its directors shall be Icelandic citizens or shall have been domiciled in Iceland for at least five continuous years. In the case of joint-stock companies, 4/5 of the share capital shall be owned by Icelandic citizens, and Icelandic citizens shall exercise the majority of the votes at shareholders} meetings.

Importantly, the stipulation that foreigners have a legal domicile raises some important considerations. In order to be legally domiciled in Iceland, one is required to have a kennitala (a civil registration number) and be registered at Registers Iceland.

This likewise raises several other conditions. Non-EEA residents will need a residency visa, and if they are not independently wealthy, a work permit as well. Additionally, being legally domiciled entails already having a residence, i.e., renting a property, since you will not initially be able to buy property outright. Retirees may want to read more about retiring in Iceland.

There is, however, a way to circumvent some of these requirements: special permission from the Minister of Justice, in which case the Minister may grant permission to deviate from the conditions laid out in the Act on the Right of Ownership. Such special permits only pertain to one specific property, which cannot exceed 3.5 hectares, and the applicant may not own other properties in Iceland. As you might expect, there are some conditions and further exceptions to these exceptions.

The relevant application forms can be found on the official government website, or here below.

Form 1.

Form 2.

Applications can either be printed, scanned, and emailed to [email protected], or mailed directly to the Ministry. Some real estate agents that specialize in international clients may offer to take care of this application, for a fee.

Another aspect of buying property in Iceland to keep in mind is that Icelandic law makes a distinction between vacation houses and legal residencies. One cannot be legally domiciled, that is, registered, to a summer house. One’s legal residence is required to be a residence intended for year-round habitation.

Real estate listings in Iceland

Most major newspapers have real estate listings, which may be helpful if you’re property hunting in Iceland.

Vísir real estate listings.

Morgunblaðið real estate listings.

Prices will of course vary based on a variety of factors, but average prices per square metre can be found here. Note that the prices given are in hundreds of thousands of ISK. At the time of writing, the average price in the capital region is about 1 million ISK per square metre [$7,126, €6,650], so a relatively modest apartment in Reykjavík might cost some 70 million ISK [$501,000, €465,500].

How to buy real estate in Iceland

So you’re legally eligible to buy property and you’ve found the right place – how, exactly, does one go about buying it?

It’s a complicated process, and if you’re serious about moving forward with your decision, we do recommend getting in contact with a real estate broker and possibly a lawyer specializing in such matters.

Nevertheless, here are the broad contours of buying property in Iceland. Íslandsbanki also has a useful roadmap for first-time homebuyers. 

Step 1: Determining whether you are legally able to buy property, as described above.

Step 2: Getting your finances in order. Of course, this is its own topic entirely, but it may be difficult to get a mortgage at an Icelandic bank without long-term residency and/or citizenship. Many foreign nationals looking for real estate in Iceland may need to take out loans in their home countries to be able to pay cash in Iceland.

Step 3: Finding a property. The real estate listings given above are a good place to start. At this stage, you may also begin looking for a real estate agent. There are real estate agents that specialize in dealing with English-speaking clients and wrangling with some of the legal issues that arise in such cases.

Step 4: Once you’ve found an agent, they should be able to guide you through the rest of the process (n.b. Agent fees generally range from 1.5% to nearly 3% of the total sale cost). One thing to keep in mind is that you will also need a notary to sign official documents. Fees for transferring the property and registering the newly-purchased property can amount to around 1% of the total property value.

 

Share article

Facebook
Twitter

Random Questions and Answers

Ask Iceland Review
a Question
Latest news