Iceland bill would cap rent increases at inflation

A bill proposed by Iceland’s social and housing affairs minister would cap rent increases at inflation and require any scheduled increases to be written into the lease from the outset, mbl.is reported.

The bill, introduced by Ragnar Þór Ingólfsson, would amend the Residential Tenancies Act. Under the proposal, rent could not rise by more than the consumer price index. Landlords would also be barred from changing the rent during a tenancy beyond increases specified in the original agreement.

Yngvi Ómar Sigrúnarson, chair of the Association of Tenants in Iceland, welcomed the proposal. He said a recent analysis found housing costs accounted for 48.3% of inflation from 2015 to September this year, while all other costs combined accounted for just under 52%. He described the proposal as an important step towards reducing inflation.

The association’s survey of available rental properties last week found that rent per square metre in the capital region had risen 9.3% month on month, compared with August figures for new contracts from the Housing, Construction and Planning Agency, Yngvi Ómar said.

He said annual rent in Reykjavík now amounted to 6.8% of an apartment’s purchase price, meaning the property would pay for itself in 15 years if rented out. The association supports the bill and has proposed limiting rent increases when moving between short-term and longer-term leases. Yngvi Ómar said the minister had responded positively to that suggestion.