Fewer applicants receive shared ownership loans in Iceland amid funding issues

Fewer applicants received shared ownership loans than anticipated in Iceland, with only 42% of applications approved in the most recent allocation. The Housing and Construction Authority had to reject 84 applications before the weekend, primarily due to a depletion of funds in the October budget. This marks the first allocation since a prolonged pause in the program, which will now occur monthly going forward.

In total, 800 million ISK was available this month, an unusually high amount due to it being the initial distribution after a halt that began in spring. Allocations stopped because the Housing and Construction Authority had not received the necessary funding from the government. An additional one billion ISK was allocated this summer to assist first-time buyers with low incomes in acquiring affordable housing.

Many applicants had been eagerly awaiting this opportunity, with some missing out on properties that were sold to others in the interim. Contractors also expressed frustration over increased costs stemming from delays, as they were left with finished but unsold apartments built specifically for this program.

The first allocation after the pause received 145 applications, resulting in 61 approvals. Some applicants were turned down due to income exceeding the limits set by regulations or falling below those established by the Central Bank. Priority was given to applications with confirmed purchase offers, and regulations stipulate that 20% of loans each year should benefit rural areas.

A second allocation of 400 million ISK will take place on November 7, open for 12 days. Next year, the program will be adjusted to allocate four billion ISK across monthly distributions, aiming to prevent prolonged hiatuses like this year’s.