Housing support now favours renters over buyers

More than half of Iceland’s public housing-support spending now goes to renters, according to a new analysis by the Business Council, published by mbl.is.

The council says housing support should be neutral on whether people choose to buy a home or rent one. Support from the state and municipalities for renters has increased significantly over the past decade, while support for buyers has declined proportionally.

Renters now receive more than half of public housing-support expenditure, even though about 28 per cent of the population rents and 72 per cent live in homes they own.

Ragnar Sigurður Kristjánsson, an economist at the Business Council, said the government’s policy of strengthening the rental market conflicted with the preferences of people in Iceland, who would much rather buy a property to live in than rent one.

He said support measures should also be clearly targeted at those who genuinely need assistance. Under the current system, however, a very large proportion of renters receive housing support in some form.

“There is a certain imbalance in placing so much emphasis on supporting rental housing instead of simply making housing support neutral as to whether a person rents or buys,” Ragnar said.