Former MP says EEA deal opened Icelandic farms to foreign buyers

The European Economic Area agreement, not changes to Iceland’s farmland laws in 2004, opened the way for foreign buyers to acquire farms in the country, former MP Guðni Ágústsson argues in an opinion article published by Morgunblaðið.

Ágústsson says the agreement, which took effect in 1994, gave citizens of EU member states the right to buy farmland in Iceland. He recalls that some lawmakers, including then-leader Steingrímur Hermannsson, were concerned about how the rules might affect land ownership. Denmark, he notes, secured an exemption related to holiday homes when it joined the EU.

British billionaire Jim Ratcliffe has acquired several farms in north-east Iceland, particularly in Vopnafjörður, including Grímsstaðir, a farm in Fjöllum. Ágústsson says it is incorrect to attribute those purchases to the 2004 changes to Iceland’s farmland laws.

He points to the proposed sale of Grímsstaðir to Chinese businessman Huang Nubo in 2011. The property was valued at nearly one billion Icelandic krónur, and Huang planned a large-scale tourism project there. Because China was outside both the EU and the EEA, the purchase required special government permission, which was not granted. The proposal prompted protests, with prominent Icelanders calling for the state to buy the farm.

Several years later, Ratcliffe bought a majority stake in Grímsstaðir for 780 million krónur. Ágústsson says the purchase was permitted under the EEA agreement, at a time when Britain was an EU member.

In 2020, then Prime Minister Katrín Jakobsdóttir initiated changes to the farmland laws to limit large-scale purchases by individuals. Under the rules, related individuals may own no more than 10,000 hectares of Icelandic land. Ratcliffe is subject to the same limit, Ágústsson says, while questioning whether the restrictions go far enough.

Ágústsson argues that other changes made in 2004, including the removal of municipalities’ pre-emption rights, were less significant. He says municipalities had used those rights to acquire farms and then sell them to political allies, practices that had been challenged in the Supreme Court as violations of human rights and the constitution. A former requirement for owners to live on and develop their farms was also removed, after often going unenforced. Ágústsson adds that Ratcliffe has built up many of his farms with Icelandic residents living on them.

He concludes that Icelanders should consider the consequences of losing control of land he describes as valuable, extensive and in many places undeveloped. He also questions why Iceland did not secure an exemption for farmland purchases under the EEA agreement, which he says did not cover agricultural matters.

Tags: Iceland, land ownership, EEA