KEEPING IT LEGAL

Given this increased demand for rental apartments, landlords are reportedly getting away with renting to tenants without going through the proper legal channels, paying taxes or providing a lease. This of course results in poorly protected tenants that are left without a choice to accept often-illegal and usually uncertain terms. It is common for black market renters to be asked to leave without notice at the whim of landlords who have perhaps finally been able to sell their over-mortgaged flats.
On the excellent expat blog Iceland Chronicles, blogger ‘Pu The Owl’ describes her experience, “A lot of landowners would not offer a regular contract and would only accept to be paid in black money, which of course is very profitable for them but doesn’t provide any guarantee to the tenant. Some asked from four to six months in advance as initial payment, which is totally crazy in some cases, given the condition of the apartments and given the services included in the rent.”
As an experienced tenant I will stress this: You need to make sure you sign a lease with your landlord. With out a lease, you will be entirely unprotected legally and on uncertain terms—and you won’t receive state rent benefits.
You apply for rent benefits by turning in a special form that is available from your local authorities or social services offices.
The purpose of rent benefits is to bring down the cost of accommodation for lower income tenants and to reduce inequality on the rental market. Rent benefit entitlements are calculated on the basis of an apartments rent and the tenants income, net assets and number of dependent children.  All those who inhabit residential premises that they rent are entitled to rent benefit. Foreign nationals residing in Iceland are also entitled to rent benefit. Tenants living in rented state or social housing are also entitled.
The basic sum for each flat is 13.500 ISK; an additional 14.000 ISK is paid in respect of the first child, 8.500 ISK in respect for a second and 5.500 ISK in respect of a third. The children must be registered inhabitants in the premises. The maximum monthly amount of rent benefit is 46.000 ISK, and it may never exceed 50% of the total rental costs.
There are three factors, which disqualify applicants from receiving rent benefits. If the tenant—or any other person occupying the tenant’s premises—is a close relative or associate of a landlord who lives in the same building, he or she is ineligible. If a tenant or any co-inhabitant is currently exercising his or her rights to interest benefits (interest repayments for apartment owners), they are ineligible. If the lease is made for a period of less than six months, the tenant is ineligible.
People do cheat the system. The most common way to do so is when people share flats and only one individual is a registered inhabitant of the premises.
Some Resources For Finding A Place To Rent In Reykjavík
Newspapers
Fréttablaðið  (online: www.visir.is) and Morgunblaðið (online: www.mbl.is) both contain housing sections.
Online classifieds
Leigulistinn.is: basically a pay-for-use Craigslist. Classifieds on www.leiga.is, www.bland.is and www.grapevine.is all contain free housing sections.
Word of mouth
Iceland is a small, sparsely populated country and its apartments are often rented by word of mouth or through social networks like Facebook. While this may work well for the native population, it may prove harder for new Icelanders. Solution? Befriend an Icelander.
Cooperative housing
www.buseti.is, www.bumenn.is
Family
Again, Iceland is a small country. Given the volatile nature of the housing market, some may rent from their family, which may prove to be a more secure long-term option. Establishing family connections in Iceland may prove a bit of a task for the uninitiated, unfortunately.
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DISCLAIMER: This list is by no means comprehensive. We’re just trying to help. If you have tips on finding housing, please drop us a line at grapevine@grapevine.is and we will share your wisdom with all our readers!