Most Tourist Rentals Illegal

The majority of apartments and room for rent being offered to tourists have no legal permit to operate, despite efforts being made by law enforcement to shut such places down.

RÚV reports that some 1,100 apartments and rooms are available for rent in Reykjavík through the website AirBNB. However, close to 60% of these accommodations have no operating license. Most of these 800 apartments and 300 rooms are owned by Icelanders, many of whom are renting out their homes in whole or in part.

An operating licence is crucial in order to legally offer accommodation for profit, not least of all as it guarantees that certain health and safety guidelines will be met. The process, however, is expensive. It costs about 80,000 ISK to apply for the licence, in addition to a real estate tax that can cost eight times that amount. Those who can afford the process and meet the requirements can expect to receive an operating licence in about 45 days.

As reported, authorities have been cracking down on illegal apartments and rooms for tourists. Authorities have been combing over advertisements in newspapers, social media, and sites such as AirBnB, comparing the properties advertised and seeing whether or not they had the legal right to offer guest accommodation. In addition, tax records are being checked to see whether the owners of these properties are filing their taxes in accordance with running a hotel or guesthouse.

Both the police and the tax office say they will continue their supervision of the tourist rental market. Those wishing to rent out their rooms, apartments or houses to tourists are encouraged to apply for a permit to do so before starting business, and to file taxes on the income they receive from the properties.