
Efling celebrates bill on rent brake
The government has introduced a bill on limiting rent increases, for both residential and commercial rents. The bill marks a turning point in regulating Iceland's rental market, which has been in complete disarray due to excessive increases and insecurity for renters.
Efling has long fought for the introduction of a rent brake. Efling's board submitted a detailed proposal to the government last spring regarding a rent brake and this new bill largely meets Efling's proposals.
The main provisions added in the bill are as follows:
- Monthly rent increases are prohibited. At least 12 months must pass between increases, and they must be stipulated in the rental agreement.
- Annual increases may not exceed the rise in the price index (Icel.: verðlagsvísitala). Residential rents in Iceland have risen far faster than general price levels over the last 10-15 years, so this limits one of the biggest drivers of inflation.
- Benchmarks are set for how much rents can increase both at the start and renewal of rental agreements, and multiple price increases at the same time are prohibited.
- Reference figures for market rents, by type of housing and location, will be published regularly and will serve as benchmarks in rent negotiations.
- Renters' security and consumer protections will be strengthened.
Efling would have liked to go even further, for example by tying the cap on annual rent increases to a price index that excludes the housing component as this would slow inflation more. The bill instead uses the general consumer price index. Despite this, the cap on annual rent increases will be very important as rents have risen much faster than general price levels over the last 10-15 years.
The bill significantly improves renters' circumstances, and also restrains the rent prices that have been an important factor in fueling inflation in Iceland in recent years.
It is important that the bill be processed quickly and is implemented as soon as possible.




