Rental Debt Increasing, Tremors in Housing Market Skip to content

Rental Debt Increasing, Tremors in Housing Market

By Iceland Review

People unable to pay their rent have increased considerably this year, according to Sigurdur Helgi Gudjónsson, head of the House Owners’ Association in Iceland. Rent costs continue to rise and demand for tenements far exceeds the supply.

“This large increase is strange considering discussions that debts of the nation as a whole have not increased,” Gudjónsson told Bladid.

Gudjónsson said exaggerated stories of high renting prices have contributed to the increase. “As soon as stories about a three-room apartment being rented for ISK 150,000 [USD 2,400, EUR 1,700] per month spread, those who are renting at a lower price wonder whether they should increase the rent they charge.”

Gudjónsson said it is important to establish an association to look out for the interest of renters, as is common in the other Nordic countries. “The market won’t normalize until such an association has been established.”

Ásta S. Helgadóttir, an employee at the Consulting Service for Home Finance, said she had not noticed higher debts among her clients in general, but that a larger portion of her clients now live in rented housing than before.

“For the last three years there have been more people living in rented housing than owned housing who have sought our assistance due to payment difficulties,” Helgadóttir said. “So we have pointed out the necessity of increasing housing benefits.”

Helgadóttir added younger people clearly have increasing difficulties buying property. “We have noticed that the younger generation has taken on a lot of debt and that is a group that we worry about a lot, especially the age group between 20 and 30.”

Minister of Social Welfare Jóhanna Sigurdardóttir has appointed a committee to strengthen the mortgage and loan granting system as well as the social factor of the rental market. The committee will submit a report to the minister by November 1, 2007.

Click here to read about waiting lists for social apartments in Iceland.

Sign up for our weekly newsletter

Get news from Iceland, photos, and in-depth stories delivered to your inbox every week!

* indicates required

Subscribe to Iceland Review

In-depth stories and high-quality photography showcasing life in Iceland!