Homeowners warn rent cap bill could push rents higher

Iceland’s Homeowners’ Association has warned that a proposed rent cap could raise rents rather than curb them, mbl.is reports.

The association says tighter limits could prompt individual landlords to sell their properties, reducing the supply of rental homes and putting upward pressure on rents. The bill was introduced by Social Affairs and Housing Minister Ragnar Þór Ingólfsson.

Hildur Ýr Viðarsdóttir, chair of the association, said individuals account for about 60% of those renting out housing in Iceland. She said this makes the market particularly vulnerable if private landlords decide it is no longer worthwhile to rent out their properties.

Some tenants who rent from individuals have told the association they pay favourable rents but fear their landlords will sell. They could then have to rent from property companies, which generally charge higher rents, Hildur said.

She also criticised the bill for not being published for public consultation before it was submitted to parliament. The association would have been willing to discuss it with the ministry beforehand, she said.

The minister has said the bill bypassed the usual consultation process because landlords might otherwise raise rents before the new rules took effect. Hildur said that explanation appeared to assume the changes would lead to rent increases, even if the government wanted to prevent them before the rules came into force.

Hildur also noted that Iceland’s rent laws have been amended repeatedly, including changes to rent pricing rules in March.