Living in Iceland · Housing

Housing in Iceland, for foreigners

Whether you are searching from abroad or already here, renting is protected by clear law. Tenants have more rights than most new arrivals think. Most problems start because the tenant, and sometimes the landlord, does not know those rights are in the law even when the contract does not mention them.

Last verified 11 Sep 2026 · island.is, Housing and Construction Authority (HMS), Húsaleigulög no. 36/1994

How the system works, in short

The Housing and Construction Authority (HMS, Húsnæðis- og mannvirkjastofnun, say: HOOS-nye-this og MAN-virk-ya-stof-nun, the state office for housing and buildings) watches the rental market and pays housing benefit. Every home rental should have a written lease. Since 1 January 2026, the landlord must register that lease in the HMS rental register (Leiguskrá, say: LAY-gu-skrow), normally within 30 days of signing. That duty belongs to the landlord, not to you. The law also allows more than one kind of security: a money deposit, a bank guarantee, a guarantee from another person, or an insurance guarantee. If your security is money, it must sit on a separate account that earns interest, and you get it back with that interest at the end. If your rent takes too much of your income, you can ask for monthly housing benefit. Beside private landlords, there are also non-profit housing groups. They usually work with a waiting list and a membership.

Your situations, one by one

You are signing your first lease here

What actually happens: You have the right to a written and clear lease, the right to be told the rent and any later change to it, and the right to get a home that is fit to live in. A spoken agreement is still a lease in law, but you will almost never be able to prove what was agreed.
What to do: Ask for a written lease. Making it electronically on island.is is easiest, because it is then registered by itself. If you sign on paper, ask the landlord to confirm that they have sent it to HMS. You need the lease to be registered before you can ask for housing benefit.
The common trap: Paying rent in cash with no contract. It usually means the landlord is hiding the money from the tax office. You have no proof of payment, no right to housing benefit, and no record of your deposit.

You have a lease but did not read every line

What actually happens: You are bound by what you signed. If you do not understand it, you can miss notice times, rent rises, who repairs what, and how to end the lease. If there is a disagreement, the lease is the first paper everyone reads.
What to do: Read every line before you sign. If the Icelandic or the legal words are hard, ask someone you trust to translate and explain it. Then keep the signed lease somewhere safe, for the whole time you live there and for a while after you leave.
The common trap: Signing because someone says it is 'just the normal contract', and then losing your copy. Without the lease you lose the easiest way to prove what was agreed.

You paid a deposit and do not know how it is kept

What actually happens: The law allows more than one kind of security: money, a bank guarantee, a guarantee from another person, or an insurance guarantee. Your lease should say which one applies to you. If it is money, the landlord must keep it on a separate bank account that is not locked and that earns the highest interest possible. At the end, if the landlord has no lawful claim on it, you get that money back with the interest it earned.
What to do: Ask the landlord in writing which kind of security your lease uses. If it is money, ask which bank holds it and at what interest. Take photos when you move in, and write a list of any damage that was already there. Both of you sign it.
The common trap: Assuming every lease works the same way. If your security is money, it must not sit in the landlord's own private account.

The rent is too much for what you earn

What actually happens: Housing benefit (húsnæðisbætur, say: HOOS-nye-this-buy-tur, a monthly payment towards rent) is paid to people who rent on the private market, in social housing, in student housing and in halfway houses. How much you get depends on how many people live with you, your income, what you own, and the rent.
What to do: Use the HMS housing benefit calculator to see what you might get, then apply on HMS My Pages. To qualify you must be 18 or older, your lease must run for at least three months, the lease must be registered in the HMS rental register, and your legal address (lögheimili, say: LUHG-hay-mee-lee) must be registered at that home. You also need a kennitala (say: KEN-nee-tah-la, the Icelandic ID number).
The common trap: Not applying because you think you earn too much. The limits are higher than most renters expect, above all for families with children.

The landlord wants to raise the rent or end the lease

What actually happens: A landlord cannot change the rent or end the lease whenever they want. The lease has to say if the rent can change and how. To end the lease, the landlord must follow the notice rules in the rental law and in your contract.
What to do: Read your lease. Look for the part about ending the lease, and the part about the rent following prices (often linked to the consumer price index, the official measure of how fast prices rise). If something looks wrong, contact the Housing and Construction Authority. They advise tenants free of charge.

You find bad damage, mould, or unsafe wiring

What actually happens: As the tenant you must report damage or faults as soon as you can. Once you have reported it in writing, it is the landlord's job to repair anything that affects the building or your safety.
What to do: Report it in writing. An email is fine, and it shows the date. Take photos. Give the landlord a fair deadline. If nothing happens, HMS can help settle it, and serious safety problems can be reported to the local fire and building inspector.

You want to buy a home as a foreigner

What actually happens: Citizens of the EEA and EFTA can buy property here on the same terms as Icelanders. Buyers from outside may need permission from the Ministry of Justice. There are two kinds of home loan: non-indexed (the interest is fixed in money terms) and indexed (verðtryggt, say: VERTH-trigt, the loan grows with inflation). The choice changes a lot over 25 years.
What to do: Get the property valuation and fire-insurance value through HMS, ask at least two banks about both kinds of loan, and let a lawyer (lögmaður, say: LUHG-ma-thur) read the purchase contract before you sign.

You want a home that is not private rent and not a bank loan

What actually happens: There are two other kinds of housing here, and people often mix them up. The first is a housing cooperative (húsnæðissamvinnufélag, say: HOOS-nye-this-sam-vin-nu-fye-lag, a member-owned housing group). Búseti is the best known one. You pay a sum of money at the start. That payment gives you the right to live in one flat. After that you pay a monthly housing fee for repairs, insurance and the group's loans. The money you paid at the start is usually not lost. You normally get it back when you leave, under the group's own rules. The second is a non-profit rental company (leigufélag, say: LAY-gu-fye-lag). Bjarg íbúðafélag is one. It was set up by the trade unions ASÍ and BSRB. You do not pay a share at the start. You rent, but the rent is meant to be lower than the private market, and you must be a union member and be under an income and property limit to get in. Both kinds have waiting lists.
What to do: If you want the cooperative model, look at Búseti. If you want low-cost rent through your union, look at Bjarg íbúðafélag. On each website, check who can join, how the waiting list works, and what you get back if you leave. Compare that with the private market and with HMS housing benefit.
The common trap: Thinking these work like a private landlord or a bank loan. Each one has its own rules, so read those rules yourself before you pay anything.

You are looking for a home before you arrive in Iceland

What actually happens: You can look, write to landlords and even agree a lease from abroad. But some steps only work once you are here. You cannot register your legal address (lögheimili) at a home before you have a kennitala, and most people from outside the EEA need a residence permit first. Housing benefit needs that legal address to be registered at the home you rent. So there is usually a gap between the day you move in and the day your first payment can come.
What to do: Ask for the exact address, the name and kennitala of the landlord, and a written lease before you send any money. Ask the landlord to make the lease electronically on island.is, so it is registered from the start. Plan for the first months of rent yourself, without counting on housing benefit.
The common trap: Sending a deposit for a home you have not seen, to someone who will not give you a written lease or their real name. Nobody can check for you from here whether a private landlord is genuine.

Where people look for a home (editor's note)

These are not official government sources. They are the places people here actually use, and we say plainly what each one is.

Fasteignir.is is an Icelandic property site that lists both homes for sale and homes for rent. Click the renting part: look for "Til leigu" or "Fasteignir til leigu" (homes for rent), not "Til sölu" (for sale). The site is in Icelandic, so use your browser's translation.
mbl.is fasteignir is another Icelandic property and classifieds corner. It is mostly in Icelandic, but it lists homes for rent and sale alongside jobs and other classified ads. Use your browser's translation.
myigloo.is is a newer Icelandic rental site. People often share its listings in the Facebook groups. Listings appear for towns outside Reykjavík too, such as Reykjanesbær. It is not an official source, so the same care applies as anywhere else.
Facebook groups. In Iceland a lot of renting happens on Facebook, not on websites. Open Facebook, search the group name, and ask to join. Most posts are in Icelandic, so use the translate button. The bigger groups get new posts every day:
- "Leiga" (say: LAY-ga, renting), the largest one.
- "Leiga á Íslandi / Rent in Iceland", posts in both Icelandic and English.
- "LEIGA Reykjavik, Kopavogur, Hafnarfjordur...", the capital area towns.
- "leiga Reykjavík 101.105.107", central Reykjavík postcodes.
- "Til leigu í Reykjavík" (say: til LAY-gu ee RAKE-ya-veek, for rent in Reykjavík), smaller, often rooms.
- "Húsnæði til leigu" (say: HOOS-nye-thi til LAY-gu, housing for rent).
These groups move fast. Many people are watching the same posts, so good listings get answers quickly. Check often, reply as soon as you can, and be patient. Finding a place to rent in Iceland is one of the hardest parts of settling here, so persistence matters more than luck.Nobody checks who posts in these groups. Never send money before you have a written lease and you know who the landlord is.
Word of mouth. In Iceland this is often the most effective way to find a room or a flat. Tell people you are looking: colleagues, classmates, neighbours, people at the pool, parents at school, your union contact, or anyone in a Facebook group you join. Many rentals never reach a public listing because the landlord or current tenant already knows someone who knows someone. The more people who know you are looking, the more likely you are to hear about a place before it is advertised.
Bjarg íbúðafélag and Búseti are non-profit housing. Long waiting lists, but stable and worth joining early.
If you are a student, there is student housing. Stúdentagarðar (say: STOO-dent-a-gar-thar, student halls) is run by the student services of the University of Iceland, and Byggingafélag námsmanna (a students' housing association) rents to students at several schools. Both have waiting lists, so apply as early as you can, before you arrive if possible.
International rental websites do show Icelandic homes, but they are mostly aimed at short and medium stays and the prices are usually higher than the local market. Some rental search sites also charge a fee before they will show you anything. We do not recommend paying to see listings.

Editor's note (opinion)

The biggest housing risk for foreigners in Iceland is not a bad landlord. It is a lease that was never registered. Since January 2026 the landlord has to register it, so ask for that in writing and keep the answer. A registered lease opens every protection the law gives you. Companion Iceland

Sources

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