The price of rental apartments has increased more this year than in previous years, by 8.9 percent since the beginning of 2007. Inflation during that period measures 4.8 percent. Last year rental prices rose by 8.0 percent in one year and by 6.0 percent in 2005.
There is a high demand for rental properties, which has increased steadily with the growing number of immigrants, Morgunbladid reports.
With high demand and low supply the price of available apartments continues to rise; the price for each square meter in a one-bedroom apartment in 101 Reykjavík (the city center) is as high as ISK 2,000 (USD 33, EUR 23).
According to Sigurdur Helgi Gudjónsson, chairman of the Association of Home Owners, some landlords are taking advantage of the situation and treating their tenants poorly. “There are landlords who cram 20 Polish immigrants into one apartment,” he claimed.
The rental market in Iceland used to be black to a large extent, meaning the landlords didn’t report rent income to taxation authorities. But the situation has changed since the capital tax was changed from 40 percent to 10 percent.
In 2002 the government decided to make an effort to increase the number of available rental apartments on the market by permitting the Housing Financing Fund (HFF) to grant loans for constructing rental apartments. But that effort has not delivered the desired results.