Kristrún says she is not concerned about rent cap design

Prime Minister Kristrún Frostadóttir says she is not concerned about the design of a proposed rent cap, urging critics to let the debate proceed and assess its effects before making strong claims, mbl.is reported.

The bill, introduced by the minister of social affairs and housing, was referred to parliament’s welfare committee after its first reading on Wednesday.

“The design is the main thing,” Frostadóttir said. “The proposal assumes that increases above inflation will not be excessive, and that they will not happen too often, so they do not put too much pressure on the system.”

Frostadóttir, who has a master’s degree in economics, said she understood that many economists had raised concerns about introducing a rent cap. Central Bank Governor Ásgeir Jónsson has called the measure “very foolish” and said it would hurt tenants most.

Asked what she would say to colleagues who oppose the cap, Frostadóttir said people should allow the discussion to develop and consider the effects before reaching conclusions. She said the government was ready to take part in that debate and that greater stability in the rental market was important.

“It would be preferable if this were not necessary,” she said, adding that a stronger social housing system and lower rents would remove the need for such a measure. She urged people to let the debate run its course in parliament, saying she believed it would reach a good outcome.

Frostadóttir also said the proposed rent cap, along with other measures, contributed to a labour market agreement. She specifically cited penalties, chain liability and inaction, describing them as important reforms that union leaders had advocated for years.