New Plan to Tackle Household Debt in Iceland Skip to content

New Plan to Tackle Household Debt in Iceland

Representatives of the Icelandic government, Prime Minister Jóhanna Sigurdardóttir, Finance Minister Steingrímur J. Sigfússon, Minister of Social Affairs Árni Páll Árnason, Minister of Justice Ragna Árnadóttir and Minister of Economic Affairs Gylfi Magnússon, announced various new resources to solve the debt problems of households at a press conference in the Culture House yesterday.

From the Grafarholt neighborhood in Reykjavík. Photo by Páll Stefánsson.

These resources include that during forced sale of properties the market price will be subtracted from the claim and people will be able to continue to live in their homes for 12 months afterwards, in spite of the forced sale, ruv.is reports.

Moderate debt adjustments will be exempt from taxation, while extensive write-offs will be taxed. Furthermore, the weight of the indexation will be reduced.

A lease purchasing scheme will be established at the state-run Housing Financing Fund in regard to properties that have come into its ownership and property benefits will replace interest and rental benefits.

With these new resources, the government believes that the debt problem of households has been tackled.

Elín Björg Jónsdóttir, chairperson of the Federation of State and Municipal Employees (BSRB), said the government’s actions are a step in the right direction.

Although the freezing of mortgages and postponement of forced auctions were necessary steps earlier on in the process, future solutions had to be found for homeowners.

Jónsdóttir said it is important to evaluate the success of these new resources so that debt problems won’t pile up again, which jeopardize the pillars of society.

Click here to read about earlier resources to tackle household debt.

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