Rental of residential property

Rent amount

• The rent must be reasonable and clearly stated in the lease agreement

• If the lease is made for 12 months or less, the rent may not be indexed or changed during the contract period.
  This rule does not apply to non-profit rental companies, student housing, or half-way houses

• Once more than 12 months have passed since the lease came into effect, either party may request a change to the rent amount, for example, to bring it in line with the market rate for comparable housing, or due to increased operating costs incurred by a legal entity

• Disputes regarding rent may be referred to the Housing complaints committee (Kærunefnd húsamála)

Rent payments

• Rent shall be paid on the first day of each month, in advance, for one month at a time, unless otherwise agreed

• If the due date is a public holiday, the rent must be paid on the next business day

• If the tenant fails to pay within seven calendar days after the due date, the landlord may charge interest on arrears at the maximum rate allowed by law until full payment is made.

Deposit

The parties may agree whether or not to include a deposit to guarantee proper fulfillment of the lease agreement. Such guarantees may cover, for example, unpaid rent or damage for which the tenant is responsible

• Accepted forms of deposits may include:

  • Bank guarantee

  • A personal guarantee from one or more third parties

  • Insurance company

  • Cash deposit held by the landlord in a designated, unrestricted bank account that earns the highest available interest rate until the date of repayment

  • Other forms of deposit offered by the tenant, as long as the landlord deems them valid and satisfactory