Airbnb In Iceland: Growing Fast, Driving Up Costs, Mostly Not Registered Legally

Airbnb rentals have doubled in the past two years, pushed up property prices, and the majority of long-term listings are not legally registered as such. This information was brought to light in a new report from the Housing Financial Fund (HFF).

Ólafur Heiðar Helgason (shown above), an economist for HFF, presented his findings at a meeting for the fund yesterday. According to his research, there are about 6,000 Icelandic properties registered on Airbnb, about double the amount from just two years ago. The number of registrations on the site has, in fact, surpassed the number of people who register their Airbnb properties with local authorities. As a direct result, this has contributed to apartment prices increasing by 5% to 9% from 2015 to 2017.

The effect on the rental market is even more severe. Last March, about 30% of Airbnb properties in Iceland were apartments and rooms located in downtown or westside Reykjavík; only in Lisbon can one find a greater percentage of apartments registered on the site, of any western European city. In a separate interview with RÚV, Ólafur added that landlords can often make twice the amount on Airbnb that they would make renting their properties out to locals, undercutting incentives to provide housing for people who actually live here.

Even more disturbing, despite there being laws which limit the length of time someone can rent out a property on Airbnb to 90 days and requiring longer-term landlords to register their properties as a business, 60% of landlords using Airbnb beyond these limits did not register their properties in this way. This has not only deprived Reykjavík of millions in revenue — all these factors combined, it makes renting out properties through Airbnb far more lucrative for local landlords than providing housing for the already-choking rental market.

The Icelandic government recently voted to allocate 64 million ISK to enforcing Airbnb laws, but in the meantime, locals on the rental market will continue to face great difficulties finding housing.