Alma - Rights and obligations

Rights and obligations

Commencement and preparation of the lease

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.

Does the lease agreement have to be in writing?

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.

Where can I find a standard lease agreement?

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.

What has to be done when the apartment is handed over to me?

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.

Do I have to register the lease agreement?

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.

Does it sometimes make sense to register an agreement even if I don’t have to?

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.

How do I register the lease agreement?

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.

Am I entitled to housing benefits?

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.

Rights and obligations of the tenant

When do I pay the rent?

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.

Do I put up a security deposit?

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.

How do I put up a security deposit?

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.

How high should the deposit be?

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.

What happens if I reject the claim to the deposit?

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.

Where is the deposit kept?

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.

What if the landlord fails to return the deposit?

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.

What rules apply to the condition of premises?

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.

What if the premises are not in the agreed condition when they are handed over?

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.

What if the landlord does not respond?

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.

What rules apply to the maintenance of leased premises during the term of the lease?

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.

What can I do if I feel that the landlord is neglecting their maintenance duties?

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.

What if I or someone that I gave access to the premises causes damage to the premises?

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.

Who is responsible for the operating costs for the premises?

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.

Variable lease expiration

When does the lease end?

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.

How long is the notice period?

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.

What rules apply to the notice period for an indefinite lease?

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.

When does the notice period begin?

The notice period is considered to begin on the first day of the month following the written notice of termination.

What happens if I don’t leave the premises at the end of the lease?

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.

What does it mean to terminate an agreement?

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.

Under what circumstances can I terminate an agreement?

Reasons for termination could be following:

  • There are deficiencies in the premises that the landlord does not rectify
  • The quality of the premises deteriorates or they become a health hazard
  • There is significant negligence of maintenance obligations on behalf of the landlord
  • The tenant's right is substantially abridged as a result of legislation or other public instructions
  • There is substantial and repeated disturbance and inconvenience from neighbors
  • The landlord violates the tenant's right to have the agreed undiminished control and use of the rented premises
  • The landlord is guilty of a punishable offense against the tenant or his/her family
  • Other defaults on the part of the landlord may also allow termination, but they must be significant or fraudulent in nature

Under what circumstances can a landlord terminate an agreement?

A landlord’s reasons for termination could be following:

  • Rent is not paid despite demands for payment and warnings of termination
  • The tenant fails to pay rent in the form of labor as contractually agreed
  • The tenant uses the leased premises illegally or in a way that violates the provisions of the lease agreement
  • The tenant sublets the premises without the consent of the landlord, or the subtenant is guilty of any conduct of the type that entitles the landlord to revoke the lease with the original tenant
  • The tenant denies the landlord, or other persons, access to the rented premises without any valid reasons, following damage to the premises.
  • The tenant vacates the premises before the end of the rental period without having taken the necessary measures to look after them and protect them
  • The quality of the premises due to bad treatment or carelessness on the part of the tenant or persons for whom the tenant is responsible
  • The tenant’s treatment of the premises is unacceptable or the tenant is guilty of acts of personal malice against the landlord or his/her family
  • The tenant neglects his/her obligations under the lease or according to law in a gross manner
  • The tenant has submitted incorrect or misleading information to meet the landlord’s legitimate and relevant conditions for the leasing of the premises

Do I have to send a special notification of termination?

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.

What rules apply when I return the premises?

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.

Other important things to keep in mind

Who is responsible for reporting the move to utility companies?

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.

How do I contact the landlord?

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.

Where can I turn to in the event of a dispute?

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.