Iceland retains a strong property market and has 130,000 residential units in the country. According to figures from visir.is, the average residential property comes in at ISK42 million which is an increase of 12.3% from the same time last year. From the beginning of the year to August 2016 the nationwide residential property price index increased by 9.48% which has been the highest increase in just over two years as listed by Statistics Iceland. As of 2014 55.1% of households in Iceland belonged to homeowners with mortgages with 18.9% of households being owned outright with no mortgage. Buying in Iceland is something which is affordable and possible for many families and individuals, expats and locals.When an individual is selling a property in Iceland through an estate agent it is necessary for them to be 18 years old, reside in the country, hold no history of bankruptcy, have finished their matriculation examination or a comparable qualification and for them to have undertaken a specific and specialised course organised by the Ministry of Economic Affairs. Agents must have worked and been employed in the field for no less than a year in the EAA area and by a certified real estate agent. Not only this, but the agent should have professional liability insurance in an EAA area.
The fees taken by an estate agent during a house sale is around 1.5%-3% of the value of the property and it’s also worth factoring in additional fees for interbank transfers. The average administrative costs are) administration fees (including property transfers of ISK2,000) registration fees (0.4%) and stamp duty (0.80%).
Other fees include those from mortgage lenders which is from 0.5%- %t of the amount borrowed. Don’t forget also about the value added tax which is on top of estate agent fees (25.5% percent of the commission). There will also be the fees for the lawyer who oversees all legal elements and if you have a notary for drawing up the agreement these will also be charged. Ask your estate agent for average fees. The average price paid when buying a property in Iceland is around 350,000kr.
Properties are listed online in newspaper publications, property websites and print newspapers. Some of these are detailed below.
Estate agent. Excellent level of customer service specialising in the Reykjavik property market with English speaking staff.
Fjaroargotu 17, Reykjavik, IS-220, Iceland, IS
Tel: +354 05 20 2600
New estate agent company which specialise in rental but also offer a list of commercial properties and English speaking staff.
Laugavegur 66, Reykjavik, IS-101, Iceland, IS
Tel: +354 03 11 3101
Website with listings from estate agents and private sellers
Website listing rentals, properties on sale and businesses for sale
There aren’t currently any specific organisations for foreign property buyers but the link below can shed some light on the rules and regulations surrounding purchasing real property.
Official government guidance on rules and rights of owning property in Iceland entitled Act on the Right of Ownership and Use of Real Property by the Ministry of the Interior.
The typical house buying procedure begins with your eligibility. If you are a buyer who comes from a country which is a member of the European Economic Area (EEA) then you can gain property rights which mean that you do not require the permission of the Minister of Justice to buy property. That means those who have a EAA resident permit, are EFTA/EAA citizens who have settled and established themselves in Iceland or have plans to, those who come from EEA countries and work in Iceland and people who intend on opening independent business in Iceland companies who are domiciled in another member state may buy. But those from non EAA countries must seek permission and have it granted from the Minister.
Once permission is granted and you have found the right property the agent needs to get a paper certificate of the mortgages, possible rights and obligations and charges which are relative to the property in question. This can be done by your estate agent going online to check the data information service (the Landskra Fasteigna) for a cost of ISK 550 or going to the District Magistrate or Land Registry office where there is a cost of ISK 1000. This is done so that you can discover any charges which are in place against the real estate. Next, the estate agent will get the contract ready for you and you and the seller will sign it after both agreeing the conditions of sale and the price. The agreement must be paid in full at the time of the signing and if not, is registered at the District Magistrate.Until the purchase is paid in full, the new title deed will not be signed.
The following are the conditions of the registration of the agreement, which protects the rights of the purchaser of the property:
1. The name of the property must be listed as it is registered with the municipal authorities.
2. The reference number of the property and the land must be included in the agreement.
3. The planning and building societies must have described the property in the agreement.
4. The building and land number must be listed with immediate reference to its plots.
The new registration of the title of the deeds and the transfer happen at the Magistrate’s Office once all fees are paid. The process costs 0.4% of the real estate valuation plus ISK 1350. Reputable lawyers are easily found online. Icelandic locals and expats may also recommend lawyers from their own personal experience and online forums often discuss this subject too.
The house buying process in Iceland is centred on trust and honesty. Naturally this does not stop all corruption in the industry but you can sleep well at night knowing you will never be gazumped. A handshake is expected to be valued and it is as good as your word in many instances. Some problems may arise if you seek to buy some of the more expensive and plush apartments as these may be held for off market buyers who have registered their interest and are sold without the property being advertised to the public.
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