News
What About The Renters?

What About The Renters?

Published November 10, 2014

A city councilperson has pointed out that the government’s giant debt relief package is aimed at homeowners – not renters, who are often worse off financially than homeowners.

Today, Prime Minister Sigmundur Davíð Gunnlaugsson and Finance Minister Bjarni Benediktsson revealed the details of their plan to reduce homeowner debt. While this might have been good news to those who bought property in Iceland pre-crash, one group was conspicuously left out of the plan: renters.

DV reports that Pirate Party city councilperson Halldór Auðar Svansson has raised a number of facts about renters and homeowners in the context of debt relief and economic hardship.

“It is meaningless to talk about how exactly the debt relief will affect the worst off amongst homeowners when the worst off group [of all], renters, are left trapped in poverty,” Halldór wrote on his Facebook, accompanying a photo of data retrieved from Statistics Iceland on the percentage of children in Iceland who live in poverty or in economic need.

As the data points out, in 2013, 28.2% of children living in rented housing lived in households earning sub-minimum wages, and 20.6% of children in rented properties experience economic need. At the same time, only 7.5% of children living in mortgaged properties lived in sub-minimum wage households, and only 5% were living in economic need.

More data from 2013 from Statistics Iceland gives us a better picture of Iceland’s renters.

Renters in all comprise 27.1% of the country. In terms of income level, the greatest proportion of tenants paying market rate are classified as Unemployed, at 27%, followed by Fulfilling a Domestic Task (18%) or Permanently Disabled/Unfit to Work (15.6%). 15.1% of Reduced Rate Tenants are Unemployed, while 20.5% are Permanentaly Disabled and 19.1% are considered Other Inactive Person.

The largest portion of tenants paying market rate, 27.7%, are single parent households. More than twice as many renters than owners are dealing with Housing Cost Overburden, at 16.4% and 6.8% respectively.

MBL reports that Bjarni has assured the nation that even renters will feel positive effects from the debt relief package, albeit indirectly, through (projected) lower construction costs and lowering excise tax.

He also mentioned that the Ministry of Welfare is looking into “a fund that could improve the state of renters”, without mentioning in further detail what that would entail.

The Ministry of Welfare’s Rent Benefit programme offers applicants the following: “The basic sum for each flat is ISK 8,000; an additional ISK 7,000 is paid in respect of the first child, ISK 6,000 in respect of the second and ISK 5,500 in respect of the third. The children must be legally domiciled in the rented premises. In addition, 15% of the rent lying between ISK 20,000 and ISK 50,000 may be paid as rent benefit. The maximum monthly level of rent benefit is ISK 31,000; this may never exceed 50% of the rent.”

As reported, rents have been rising dramatically, and tenants have been struggling to find housing in a rental market where the tourist industry has been driving up prices.


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