Increased Housing Security for Renters in Proposed Bill

housing Reykjavík

Minister of Social Affairs Ásmundur Einar Daðason presented a bill proposing widespread changes to rental law at an open meeting yesterday. The bill is part of the government’s “standard of living contract” signed in 2019.

“The bill is intended to improve housing security for tenants by preventing unreasonable rent increases and promoting long-term rentals, as well as establishing mandatory registration of lease agreements and mediation,” the bill’s abstract states.

Banking collapse forced low earners onto rental market

Iceland’s rental market grew by 70% following the 2008 banking collapse, and most who entered the market were low earners, according to information presented at the open meeting. During the same period, rental prices increased by around 45%. Today around 8,000 households pay over 50% of their income toward rent. According to international standards, housing costs are considered burdensome if they exceed 40% of an individual’s income.

According to the bill, the average duration of rental leases in Iceland is just 14 months. The proposed legislative changes would tighten the regulations on short-term leases, thus encouraging longer contracts. The new legislation would also limit landlords’ ability to increase rent.

Another change proposed by the bill is the establishment of free mediation services to tenants and landlords, assisting them on settling disputes without going to court.

Drífa Snædal, President of the Icelandic Confederation of Labour (ASÍ), praised the bill, stating “One can’t think of a better improvement to collective agreements than lowering housing costs.”