Magnús Árni Skúlason, economist at Reykjavík Economics, states the new regulation aimed to limit Airbnb rentals has had an effect on the real estate market, Morgunblaðið reports. The regulation, which took effect on January 1st, exempts homeowners from the requirement to obtain a potentially costly operating license for short term rentals through Airbnb or similar services, as long as the property is rented for no more than 90 days per year. Magnús says the effect of the regulation appears to be giving owners more incentive to rent apartments for longer periods or use the opportunity to sell their property when the timing is advantageous.
Magnús adds that the Iceland króna has strengthened considerably and rental rates have increased, and both factors affect the income from apartments rented to tourists. The value added tax and income tax of such short-term rentals must also be paid if the income exceeds one million krónur. Magnús states the situation for those who rent their own residential property or a room for less than 90 days is different. In such cases, Airbnb leasing may provide a major windfall.
