35,000 Apartments to be Built in 10-Year Housing Plan

architecture Gardabær buildings crane urban planning Iceland housing

State and municipal authorities reached a major agreement yesterday, July 12, in which they committed to expand the supply of housing by 35,000 units over the next 10 years.

The decision came in partial response to a working group formed last year, which highlighted the need for both social housing and affordable housing in Iceland. The working group emphasized the nearly-unprecedented explosion in housing costs over the last two years and the need to increase housing supply in order to insulate Icelanders, especially those with low income, from the effects of the real estate market.

The agreement is to run from 2023 to 2032, with a goal of 4,000 units a year for the first five years. Of these new units, 30% of them are to be affordable housing, and 5% are to be set aside as social housing, housing which municipalities have a legal obligation to provide to some qualifying individuals and families.

Sigurður Ingi Jóhannsson, Minister of Infrastructure, stated that a major goal of the new agreement is to protect residents from the large fluctuations that have characterized the last years. These fluctuations have especially impacted first-time homebuyers, who are having difficulty entering the market because of the ballooning prices.

The agreement also aims to streamline some aspects of housing development, including an increased emphasis on digital housing plans and bringing several other regulatory processes under one common framework.



City Will Not Make Cuts Despite Deficit, Says Reykjavík Mayor

Dagur B Eggertsson Reykjavík Mayor

Reykjavík Mayor Dagur B. Eggertsson told RÚV the city will not resort to service cuts or price hikes as a result of its operational deficit. He adds that construction and urban consolidation in Reykjavík will yield profits in the coming years. Socialist Party councillor Sanna Magdalena Mörtudóttir says the city’s new budget does not address poverty or the ongoing housing crisis while other councillors say the city’s debt is too large.

The City of Reykjavík will be operated with an ISK 3.4 billion [$26.1 million, €22.6 million] deficit next year, according to the budget presented by city authorities earlier this week. This is the third year in a row the city runs on a deficit. Its debt is expected to increase by ISK 24 billion [$185 million, €160 million] and will be almost ISK 174 billion [$1.34 billion, €1.16 billion] by the end of next year. That applies to the city’s operations that are funded by taxes, or the so-called “A” section of city operations. The “B” section, which includes businesses in part or whole ownership of the city, such as Reykjavík Energy (OR), Associated Icelandic Ports (Faxaflóahafnir), Sopra bs. and Strætó bs., among others, is projected to produce a surplus of ISK 8.6 billion [$66.1 million, €57.2 million].

Long-term loans for construction projects

“We are going to grow out of this problem and our plans allow for that. We have low tariffs [compared to other municipalities], especially for those who have less, and we intend to keep it that way,” stated Dagur. He added that the city’s debt was nothing to worry about. “As a percentage of revenue, it is far south of something to be concerned about and we are in good standing compared to other municipalities.” According to Dagur, part of the city’s debt is due to long-term construction projects including the building of new neighbourhoods. “We take part of it as a loan and the development pays for it over a long period. That’s just sensible economic management and responsible financial management, as we have done here in recent years.”

Social housing and public transit overlooked

Socialist Party councillor Sanna Magdalena Mörtudóttir wants the city to increase its revenue by taxing capital income, “to ensure that we can build up the good service that people have the right to receive.” She criticised the budget’s housing plan, which she stated did not address the waiting list for social housing, which was around 850 people long. “This budget does not account for eradicating poverty, eradicating this housing crisis that people are experiencing here. And that’s something that is unacceptable.”

Both People’s Party councillor Kolbrún Baldursdóttir and Independence Party councillor Eyþór Arnalds expressed concern at the city’s rising level of debt, with Eyþór stating that the budget did not account for funding the Borgarlína rapid bus transit line, though its construction is scheduled to begin soon.

City to Open Residence for Women with Mental Illness


The Reykjavík City Council has approved the city’s purchase of a property at Hringbraut 79, RÚV reports. The property will be used as residential home for women with mental illness and related issues.

The City of Reykjavík purchased the property for ISK 230 million ($1.84 million/€1.62 million). It currently consists of two apartments, but these will soon be subdivided into seven independent units that will each have their own kitchen space and private bathroom.

The Centre is meant to help women with mental illnesses to lead independent and meaningful lives both at home and in the community by meeting their needs in a holistic and individualised manner. It will be managed by a director and other staff and is scheduled to open this fall.

Hafnarfjörður Approves Pet Ownership in Public Housing

This cat is not Gunnlaugur

The Family Council of Hafnarfjörður has agreed that individuals living in social housing apartments owned by the municipality will now be allowed to own dogs and cats, RÚV reports.

Up to now, pets have not been allowed in social housing in Hafnarfjörður. There are still some stipulations to the new allowance, however, namely that individuals living in units that have a shared entrance must still obtain the agreement of 2/3 of their neighbours to acquire a pet. Individuals living in a unit with a private entrance do not need to obtain neighbour consent.

Reykjavík City Council Acts on Housing

City of Reykjavík

Reykjavík City Council has approved eight proposals made by the governing majority to address housing issues. RÚV reported first. A proposal from the Socialist Party to investigate the needs and wants of individuals facing housing problems was also approved. Most proposals from opposition parties were referred to the city’s Department of Welfare and Finance Bureau for further consideration.

The proposals were part of the governing majority’s action plan on housing issues, most focusing on homeless individuals. Among the approved proposals are providing five plots for the building of up to 25 mini homes in the year 2018, improving services in collaboration with the federal government on health care for homeless people, and insuring the welfare department complete the writing of proposals on continued housing development for people considered homeless.

Another approved proposal is to negotiate with the Minister of Housing in requiring all municipalities to provide a certain amount of social housing in proportion to their population. According to the council, this change would better distribute the cost of resources that the City of Reykjavík now largely shoulders.

Þórdís Lóa Þórhallsdóttir, chairperson of the Council’s Executive Committee, said Reykjavík has never in its history had more apartments under construction than it does now. “Nowhere in Iceland are contributions to housing issues higher than in Reykjavík,” Þórdís Lóa stated, adding that from 2018 to 2022, contributions to housing are expected to total ISK 70 billion ($663m/€567m), of which ISK 14.2 billion ($134m/€115m) will be invested this year. “If all municipalities in the capital area had the same proportion of social housing as Reykjavík there would be no waiting list for social housing.”