New Legislation Bans Hospitality Business In Residential Housing

New legislation bans owners of hospitality businesses from renting out long-term accommodation defined as residential housing. The Icelandic government announced the law on their website, May 3.

Real estate owners can still lease out their homes for a maximum of 90 days per year for a maximum of two million ISK.

Business licenses will only be granted to commercial housing, or if the rented unit is located rurally, for example farm guesthouses.

The legislation is a part of the government’s efforts to increase the supply of residential housing in the capital area.

“This legislation demarcates residential and commercial housing when it comes to accommodation, focusing on the actual utilisation of housing. That is why it is no longer possible to purchase a residential apartment in an urban area and rent it out as a guesthouse longer than 90 days, like has happened in downtown Reykjavík where even entire apartment blocks are transformed into hotels,” said Minister of Culture and Business Lilja Dögg Alfreðsdóttir.