From Iceland — Social Democrats Seek to Strengthen Rental Market

Social Democrats Seek to Strengthen Rental Market

Published September 11, 2013

Larissa Kyzer

Providing governmental support for rental companies and implementing changes in current building regulations are among the proposals made by Social Democrats in parliament yesterday, in an effort to strengthen the Icelandic rental market, reports RÚV.
An unprecedented number of people have turned to Iceland’s rental market following the economic crash, but long-term rental properties are expensive and difficult to come by, in part because homeowners find it more convenient (and cost-effective) to rent to tourists on a nightly or short-term basis. Moreover, there are simply not enough rental properties to be had in a country in which home ownership has been the norm.
In their parliamentary proposal yesterday, Social Democrats suggested that housing benefits, which are based on family size and income, be the same for both renters and homeowners. They also proposed that the combined rental income of each residence be exempt from capital gains tax. In that way, they say, homeowners would be encouraged to rent out rooms and apartments on the private rental market, instead of renting to tourists for the short term. The Social Dems also suggested that rental companies which commit to long-term rental operations be given additional governmental support, in the form of municipal grants.
Árni Páll Árnason, the head of the Social Democrats, says that the point is to strengthen rental companies and make it easier for them to operate. Additionally, he says, the state would make unused land available for those who want to build rental housing on it, and the Housing Financing Fund would have oversight on the new properties’ rental or sale. Going forward, Árni Páll also suggested the further revision of building regulations, in order to facilitate the construction of more affordable housing.
He went on to say that there are many indications that building regulations are too strict for the needs of the rental market and that it is important to simplify the current model. He believes that it is possible to do this without giving up governmental oversight.

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