News - 26.05.2025

The Attack on the Housing System

It is wise to lend an ear when a certain choir raises its voice — specifically, the choir of Icelandic special interest groups. This year’s springtime song from that choir might be titled: “Down with the General Housing System,” and the melody is rather rhythmic, though each singer follows their own tune and adds notes at will. The underlying theme is that too many rental apartments are being built by Bjarg Housing Foundation, which ensures long-term rental housing for lower-income individuals and families who are active on the labour market. In current discussions on housing issues, this is the dominant tone from stakeholders, implying that the general housing system is somehow a liability in the nation's housing affairs — even detrimental to those who live in such housing.

Long Waiting List for Secure Housing

The general housing system was established by law nearly a decade ago, rooted partly in a government declaration accompanying the 2015 collective agreements. At the time, there was a serious shortage of rental housing for low-income families and individuals. The first apartment from Bjarg was handed over in 2019, and since then, more than a thousand individuals and families have gained access to secure housing. But the waiting list is long.

The waiting list is long because the framework around rental housing in Iceland is fragile, and many working people in Iceland cannot afford to buy a home. That fully employed people cannot secure a roof over their heads is a grave concern and should, in and of itself, prompt both long-term and short-term measures. Meanwhile, for those who cannot or do not want to buy — for example, people temporarily residing in the country — there must be a reliable rental market.

Landlords have far too much freedom to raise rents at their own discretion, and tenants’ rights are insecure. Bjarg has clearly demonstrated that it is possible to build more cost-effectively than has been the norm. Blær Housing Foundation, rental company operated by VR, has applied Bjarg’s experience to build affordably and has already handed over 34 rental apartments to tenants. These apartments are not subject to income limits like those of Bjarg. Blær receives no public subsidies, and the company’s investment in the apartments pays off over time. Nevertheless, the foundation can offer rental apartments that are about 20% cheaper than market rent. The first tenant who moved into an apartment with Blær had previously experienced a rent hike from ISK 260,000 to ISK 430,000 in just four years. Few can shoulder such an increase in housing costs.

When the voices of special interests call for reducing the construction of rental housing with moderate rents, they are simultaneously calling for fewer tenants to find shelter from a rental market primarily driven by short-term profit . And of course, it's beneficial for those who profit off tenants if people have no alternatives. The reality, however, is that a sound and well-organised rental market contributes to the health of housing affairs — where housing is seen as a human right, not a profit opportunity for investors. A proper framework for rental housing directly impacts overall housing prices and, in turn, the welfare and living standards of the general public.

Pressure on Government and Municipalities

Housing is a key issue in wage negotiations and has one of the greatest impacts on the livelihood of workers. The current situation is unacceptable, and we must not allow special interest groups to dismantle the few things that are working well. The tasks ahead are numerous, and Bjarg and Blær are part of the solution. The spotlight is now squarely on the state and municipalities, which must begin to show forward-thinking and courage in tackling the housing crisis. There is no single magic solution, but we all have the right to a roof over our heads at affordable terms. We can no longer tolerate the massive fluctuations in housing payments that both renters and mortgage holders repeatedly face. This is the most important issue in politics today, and it is high time to show the will to act.

Halla Gunnarsdóttir, Leader of VR

The article was first published on visir.is, May 26, 2025