Reykjavik cuts parking garage charges by 90 percent

The Federation of Icelandic Industries welcomes Reykjavik City Council’s decision to cut street construction charges for parking spaces in underground garages by 90 percent, mbl.is reported.

Jóhanna Klara Stefansdottir, director of the organisation’s construction division, called the decision a long-overdue change in policy on development and fees. The city council approved it at a meeting last Thursday.

She said the charge had increased 26-fold in February last year, rising from just under 37,000 Icelandic krona to around 942,000 krona for a typical 30-square-metre parking space in an underground garage.

“We were astonished because this was entirely inconsistent with the municipality’s need to densify development and use less above-ground space for parking,” Stefansdottir told Morgunbladid.

She said it was also in the municipality’s interests to encourage new development in this way, and expressed hope that other municipalities would review the issue similarly.

Stefansdottir noted that street construction and building rights charges had risen sharply in recent years. An analysis by the federation found that Iceland’s eight largest municipalities collected 57 billion krona in such charges between 2022 and 2024, including nearly 19 billion krona collected by Reykjavik.

She said the charges had a major impact on future projects and construction costs, and were an unusual approach when the aim was to build affordable housing. Charging heavily for underground garages was also inconsistent with the emphasis on urban densification and efficient land use, she said.

She described the city council’s decision as an important step in the right direction.