“AirBnB” Law Confirmed In Alþingi

New legislation concerning short-term leasing allows residents to rent out their private dwelling, while simultaneously limiting the subletting of other properties in urban areas. The law was introduced by Minister of Industries Hanna Katrín Friðriksson and passed in Alþingi on Thursday, March 19. Its aim is to increase housing supply.

According to member of Alþingi’s Industrial Affairs Committee and Social Democrat MP Kristján Þórður Snæbjarnarson, the law is supposed to ensure that people can lease their legal residence for short-term purposes.

The new legislation primarily cracks down on companies supplying short-term accommodation via apartment hotels. In 2024, the government stopped administering business licenses for accommodation companies, while retroactive permissions were still valid and indefinite.

With the change, business licenses are valid for five years and available for renewal, given that company accommodation is zoned as commercial, as opposed to residential.

Individuals’ personal rentals will still be limited to 90 days per year and two million ISK in rental income, with the option of subletting a personal residence within an urban area as well as one rural property, such as a summer cottage.