On this page, we will attempt to go over the main points about the rights and obligations of individuals on the rental market and explain them in plain language. All information about rights and obligations is based on the Rent Act no. 36/1994, which can be found on the website of Alþingi.
Yes, the Rent Act stipulates that all lease agreements must be in writing and include certain information (see the list in Article 6 of the Rent Act). It is good for everyone to have a written agreement if something comes up during the lease period. However, the lease is governed in all respects by the Rent Act, even if no written agreement has been drawn up. If no written lease agreement is concluded, you and your landlord will be considered to have agreed on an indefinite lease term. The rent amount is the amount that the landlord can prove that you agreed to.
You can find free forms for standard lease agreements on the website of the Ministry of Social Affairs . It should therefore not be much trouble to make a written agreement when you begin leasing.
The condition of the premises must be inspected and a report, i.e. an inspection declaration, written. When you return the premises, the report is used to see whether there has been any unusual wear and tear or damages to the premises. You can carry out this inspection yourself, along with your landlord, or recruit an independent third party to do it.
With official registration, documents are recorded to protect your rights against third parties. There is no requirement for lease agreements to be registered so the agreement does not have to be registered in order for it to be valid. The provisions of the agreement are binding for you and the landlord, whether the agreement is registered or not. You will have to register the agreement to be able to apply for housing benefits, however.
If you make an agreement whereby you enjoy more rights than those discussed in the Rent Act, you might want to think about registering the agreement. By doing that, you ensure that you won’t lose these additional rights against a third party.
You take the original of the agreement to the District Commissioner's office and pay a registration fee according to the list of tariffs. You will also need to submit a photocopy of the agreement on certified archival paper, which is available at most stationery stores. Registration typically takes several working days, after which you can return to the District Commissioner’s office to retrieve the agreement.
Many tenants are entitled to housing benefits. They can be applied for at the website of the Housing and Construction Authority. The website also has a list of the conditions that must be met and a calculator to estimate the amount to which you are entitled to.
Rent is usually paid in advance, one month at a time, on the first day of the month. This arrangement may be amended, in which case the new arrangement must be recorded in the lease agreement. You and your landlord are free to negotiate the amount and whether it should change during the term of the lease.
A landlord usually requires a security deposit before handing premises over to a tenant. If the rent is not paid or if something is damaged, the landlord can lay claim to the deposit. According to the Rent Act, the landlord has four weeks to make such a claim after the leased residential premises have been returned.
The Rent Act (see the list in Article 40) lists five different forms of a surety that may be submitted. This can usually be negotiated with the landlord.
The amount is negotiated separately, but a typical deposit is an amount corresponding to two to three months’ rent. The amount may not exceed three months' rent according to the lease agreement if the landlord requests a personal guarantee from a third party or a deposit paid by the tenant to the landlord.
The landlord can then refer the case to the Housing Complaints Committee or bring a court action regarding the tenant’s obligation to pay compensation. The landlord has 4 weeks to do so. The deposit remains in the landlord’s keeping while the case is referred to the Housing Complaints Committee or brought before the ordinary courts. Further information on the Housing Complaints Committee can be found on the website of the Government of Iceland.
The landlord must keep this money in a demand deposit account with a commercial bank or savings bank. If the landlord does not lay claim to the deposit, they must return the money to you at once, together with the interest that has accrued during the term of the lease.
In that case, the landlord must pay penalty interest from the day when four weeks had elapsed since the premises were returned until the day when the deposit is returned.
Residential premises may not be leased in any condition. According to the Housing Act, premises must fulfill certain requirements, e.g. regarding hygiene, water and sewage pipes, fire safety, to name just a few things. You should inspect the premises carefully before taking out the lease to make sure that they meet your requirements before you sign the lease agreement. A detailed inspection must be carried out when the property is handed over and when it is returned.
Then you need to notify your landlord in writing and demand that the deficiencies be corrected. If other deficiencies come to light during the term of the lease, you must notify your landlord in writing within fourteen days from becoming aware of them. If you do not do so in time, the landlord may consider that you accept the condition of the premises.
If the landlord has not responded to your written suggestions, you can carry out repair work on the property yourself and deduct the cost from the rent. In order for this to be legal, you have to have an independent assessor confirm in a verifiable manner that maintenance is necessary.
The landlord is generally responsible for all maintenance of the premises, inside and out. This does not include minor maintenance such as replacing light bulbs, cleaning drains, tightening screws, etc. The parties do, however, enjoy some freedom to agree on the tenant being responsible for maintenance inside the apartment. If this is done, the lease agreement must specify exactly what maintenance is the responsibility of the tenant.
You must then send a written notification of what needs to be fixed and demand that the landlord take action. If the landlord does not respond within four weeks, you may seek the approval of an independent inspector to carry out repair work yourself and deduct the cost from the rent. If eight weeks elapse without a response from the landlord, you may terminate the agreement.
In that case, you must repair the damage as soon as possible. Otherwise, the landlord can have the damage repaired at your expense. Before doing so, however, the landlord must inform you about their complaints in writing and explain what is to be done. You will then have four weeks to respond and complete the repair work. If you do not respond within four weeks, the landlord can have the repair work carried out at your own expense, subject to the approval of an independent inspector.
The landlord is usually responsible for paying property taxes, annual utility fees and resident association fees. You, the tenant, will pay electricity and heating costs. The parties may agree on another arrangement but in that case, the arrangement must be stated clearly in the agreement.
A fixed-term lease agreement expires on the agreed date. No special notification is required. A fixed-term lease agreement will usually not be terminated during the term of the lease, although termination is allowed in certain instances, which must be set out and defined in the lease agreement.
When a fixed-term lease agreement provides for the termination, the mutual notice period must be at least three months. Termination must be made in writing, stating the reason for the termination.
You can terminate an indefinite lease agreement at any time. However, the notice period varies depending on the type of premises covered by the agreement. The termination must be in writing.
The notice period is considered to begin on the first day of the month following the written notice of termination.
If you do not move out within eight weeks from the end of the lease, whether that was due to termination or not, the lease is considered to be extended indefinitely. This does not apply, however, if the landlord has demanded that you vacate the premises or if you have not fulfilled your contractual obligations, e.g. to pay rent or meet other requirements.
Termination means that the agreement becomes void. You will no longer be in possession of the premises and will of course also cease to pay rent. The Rent Act provides for certain circumstances where either you or the landlord may revoke the lease. They are listed in articles 60 and 61 of the Rent Act.
Reasons for termination could be following:
A landlord’s reasons for termination could be following:
In most cases, you have to send a notice to the landlord to demand rectification of the factors that you deem unacceptable before termination is allowed. The same applies if the landlord intends to terminate the agreement. Such a demand must be in writing and submitted in a verifiable manner, e.g. by registered mail. An oral demand is not sufficient. It is very important that you make sure that the situation allows you to terminate the agreement. Illegal termination may result in liability so it’s always better to proceed with caution. Termination is an absolute last resort.
You must return the premises in the same condition as you received it, and the same applies to whatever came with the premises. Some wear and tear to the premises is to be expected, but you may have to compensate the landlord if it is more than could be considered natural. This can also be the case if the apartment is dirty or poorly cleaned when it is returned. That's why it is important to prepare a detailed inspection declaration before moving in and photograph the premises.
The person who is registered for the meters is responsible for reporting the move to electricity and heating utilities, and must pay all energy bills up to that point. It is therefore important to read the electricity and hot water meters until you move out.
It’s a good rule to have your communication in writing. It can make things a lot easier in the event of a dispute. You will sometimes be required to send a notice, in which case it is important that you do it in a “verifiable and secure manner”, as the phrase goes.
In the event of a dispute, you can always contact the Housing Complaints Committee. You have to contact the Committee in writing, stating clearly what the matter is, e.g. what claims are made and the reasoning for them. The Committee issues a binding ruling in writing when everyone has had a chance to state their point of view. The ruling can be referred to a court of law within eight weeks of it being issued. It is advisable to seek legal counsel when submitting matters to the Housing Complaints Committee.