Managing Real Estate Assets in Iceland

Iceland has become an attractive destination for many things. Film production companies are already landing in droves to shoot their films and series. The Icelandic government has opened up many other sectors of the economy to foreign investors. The property sector has also seen healthy growth as many people are willing to buy property in Iceland. They either settle here or spend some of the year in Iceland. This has boosted the property management business in Iceland.

Buying Property in Iceland

If you want to buy a property in Iceland as a foreigner, you must obtain certain official authorisations before you can register the property in your name. The Icelandic capital Reykjavik has the most developed property market. This is understandable, as Reykjavik is home to over 60 per cent of the country’s population and all the action takes place in this city. This does not mean that property is not being bought and sold in other regions of the Nordic country, but it may be rare to find, literally.

Airbnb a Major Player

The concept of property management is perhaps not as popular in Iceland as in other countries. The proportion of the indigenous population who own and live in their own homes will be the majority. There are more and more cases of Icelanders who have settled abroad buying a house in their home country. Some of them will rent out their property to tourists visiting Iceland. In this area, international providers such as Airbnb have conquered the market. They offer a wide range of properties for short stays both in Reykjavik and in the country's other major locations.

In their typical style, they take over the property from the owners and guarantee them a regular income. They then advertise the property on their website to attract guests. The owners may wish to stay in their property for a certain period of the year. This is communicated to Airbnb so that they do not take bookings for this period.

How it Works

Property management in Iceland works in the same way as in most other parts of the world. Property owners enter into contracts with property management companies. This may even be your neighbourhood property management company. The property management company takes over the property and makes changes to make it suitable for renting out to guests. The owner of the property is guaranteed an income. This is usually the actual rent collected minus the costs incurred by the property manager for maintaining the property and a certain predetermined percentage as commission.

This is a convenient arrangement for everyone. Guests prefer to stay in these houses rather than in hotels, which charge much higher prices. They stay in a cosy living environment and can also cook for themselves if the conditions of their stay allow it.

As this concept of property management catches on in Iceland, perhaps more people will take advantage of this service.

Some Grey Areas Still Remain

There is a difference between a property owner who regularly lives in their home and has it managed for part of the year by a property management company, and those who invest in a property with the sole aim of generating rental income. The latter are treated by the country’s tax authorities as if they were earning the rental income as business income. The Icelandic authorities have yet to address this issue. It should not be long before some legislative changes are made to resolve this issue.

If you need help in Iceland, contact the Swapp agency.