In Focus: Whose Land Is It Anyway?
In 2011, a Chinese businessman named Huang Nubo tried to buy one of the largest farmlands in Iceland, Grímsstaðir á Fjöllum. Since Nubo was neither an Icelandic citizen nor a resident of the European Economic Area (EEA), he was required to apply for an exemption from Iceland’s Ministry of the Interior in order to purchase the land. While his application was being processed, the case became a hot topic among politicians, the media, and the public. Many were uneasy about the idea of a foreign citizen owning such a large part of the country.
Nubo’s application was denied, but a few years later, Jim Ratcliffe, an EEA resident, bought the property, no exemption required. Though public discussion around Nubo’s purchase of Grímsstaðir was heavily tinged with xenophobia and nationalism, it raised some legitimate concerns that have once again come to the forefront. Should just anyone be able to buy land in Iceland and do with it what they please?
Why are we talking about this?
The discourse on land purchases has never managed to shake that touch of xenophobia, but the fact remains that laws and conditions for buying land in Iceland are laxer than in neighbouring countries – both when it comes to the purchaser’s nationality and their intentions. In the past few years, several valuable estates have been bought by wealthy individuals, both Icelandic and foreign, with no intention of living on the land or farming it. Some of the estates, continually farmed since Iceland’s settlement, are now falling into disuse. In some places, large swathes of land consisting of several estates – even whole valleys – have been bought by the same party. This can be unsettling for residents and those with historical and emotional ties to an area, because it affects the makeup of farming communities, who in many cases are already fighting against depopulation.
When individuals purchase property through a corporation, as is often the case, its true owner can be difficult to trace. When Iceland’s national broadcaster RÚV requested information from Registers Iceland about what proportion of Icelandic land was owned by foreign nationals, they were told it was impossible to assess, because around 30% of land was owned by companies of which they had no way of knowing the true owner.
How did we get here?
When Nubo’s case was in the news, it became clear that land ownership is a hugely emotional issue for Icelanders. Iceland has only been an independent state for a little over 70 years and the nation has an intense cultural connection to the land they inhabit, and an immense pride in their independence. One of the main reasons Iceland isn’t in the European Union is that it is perceived as a threat to the nation’s independence. The same argument was made against joining the EEA. Other EEA members, such as Norway and Denmark, set up conditions for foreign nationals who want to buy land. If the hopeful real estate buyer hasn’t lived or worked in the country for five years, they must apply for special permission for the purchase from the Ministry of Justice. When Iceland became part of the EEA in 1993, it put no such restrictions in place.
What’s at stake?
Another reason locals are afraid of large swathes of land falling into foreign hands, is the resources that come with it. In Iceland, a landowner’s property may come with (salmon) fishing rights, a potentially lucrative business. Grímsstaðir owner Ratcliffe, for example, owns several estates with fishing rights in different parts of the country.
Perhaps no less important, considering Iceland’s popularity as a tourist destination, is land containing natural wonders. Many of Iceland’s most popular tourist sites, such as Fjaðrárgljúfur canyon and Hraunfossar waterfalls, are on or near privately-owned land. This summer, the issue resurfaced yet again when Hótel Katla was sold to Keahótel Ltd., 75% of which is owned by American investors. Hótel Katla is part of the Höfðabrekka estate, which comes with 40,700ha of land, fishing rights, and an airport.
Even questions of water rights or the right to harness natural resources by, for example, building a power plant, are not crystal clear in Icelandic law, which lacks a clear definition of what counts as a natural resource. Without clearer legislation, it could be difficult for the government to oppose the exploitation of natural resources on private land. When you consider the enormous value of what’s at stake, it becomes clear there is a need to reconsider land purchase legislation.
What is being done?
After Nubo’s case in 2011, then-Minister of the Interior Ögmundur Jónasson put some rules in place concerning purchase of land by foreign nationals, but these rules were abolished a few months later after the objection of EEA authorities, who claimed they violated Iceland’s EEA contract. Since then, the issue has been discussed by almost every government, including the last one current Prime Minister Katrín Jakobsdóttir was part of.
According to Katrín, this time the government intends to follow through on the matter, but what exactly will be done remains to be seen. In an interview with RÚV last July, Katrín stated that landowners’ nationality is not the issue at stake, but rather clarifying landowners’ responsibilities to the government and the community. She mused that some possible changes to law included limiting the number of estates or the total area of land any individual could own, or tackling the issue through zoning regulations. Meanwhile, Minister of Justice Sigríður Á. Andersen has stated that forbidding foreign parties from purchasing land, whether from inside or outside the EEA, is not the solution. She told RÚV, “it’s obvious they could simply buy Icelandic companies, and acquire the land through them.” She wants to increase transparency in company ownership of land and plans to introduce a bill to parliament this term which tightens land purchase regulations.
The importance of land, especially untouched nature, can hardly be overstated. While forbidding people to buy land simply based on their place of birth is hugely problematic, increased clarity and transparency in land ownership and rules about land usage can be nothing but a step forward. There’s pressure on the government to act on the matter sooner rather than later, as more and more land is being bought up by wealthy individuals with no intention of farming or being part of the community. As of the time of writing, however, it’s still stuck in political purgatory.
Read the full article in the most recent issue of Iceland Review or subscribe here or to get the magazine delivered to your door.
Iceland Review is the longest running English-language magazine presenting Iceland’s community, culture, and nature since 1963.