Housing Authority reopens applications for shared equity loans in Iceland

The Housing and Construction Authority has reopened applications for shared equity loans, aimed at facilitating access to the housing market for individuals. These loans can cover up to 20% of a property’s purchase price and are meant to be combined with other loans from financial institutions. The initiative is part of government measures to support four-year wage agreements in the labor market.

Many potential buyers have been waiting for months for the reopening of the application process. There have been instances where buyers missed out on properties, or developers have faced increased financing costs, leaving them with unsold apartments specifically constructed for this loan program.

Due to delays in the disbursement of shared equity loans, the government approved an additional billion Icelandic króna this summer to assist low-income first-time buyers in acquiring affordable housing. Since then, the Housing and Construction Authority has been waiting for the treasury to transfer these additional funds.

If applications exceed available funds, there may need to be a prioritization process for those seeking loans, according to a recent interview with an official from the Housing Authority. However, there are no concerns about funds running out immediately upon reopening applications.

These shared equity loans help individuals transition from renting to homeownership, particularly benefiting first-time buyers and those who haven’t owned property in the last five years, provided they meet certain income criteria. Borrowers must contribute at least 5% of the purchase price, while the loans require no interest or monthly repayments, with repayment due after 10 to 15 years or upon sale of the property.