Iceland: New Home Sharing Law To Take Effect January 1, 2017

(Nov. 29, 2016) On May 31, 2016, the Icelandic Parliament (Althingi) passed a new law amending the Act on Restaurants, Lodging and Entertainment. (Lög um breytingu á lögum um veitingastaði, gististaði og skemmtanahald nr. 85/2007 (heimagisting, veitingastaðir án áfengisveitinga, ótímabundin rekstrarleyfi) [Act on Amending the Act on Restaurants, Lodging and Entertainment 85/2007 (Private Accommodation, Restaurants Without Alcoholic Beverages, Indefinite Operating License)], Althingi website; Lög um Veitingastaði, Gististaði og Skemmtanahald [Act on Restaurants, Lodging, and Entertainment], Act No. 85 (Mar. 29, 2007).) The amendment contains new provisions on the private rental of property. The legal period for the renting out of private property by individuals in a non-commercial way (such as through the use of Airbnb) will, under the new rules, be capped at 30 consecutive days and a maximum of 90 days total per year and per person. (Act on Restaurants, Lodging and Entertainment Act, as amended, art. 3.) Moreover the annual gross income that may be earned from private rental of property is capped at ISK2 million (about US$17,700) per person annually.  (Id.)

In addition, all private individuals renting out property must register with the local authorities and pay a registration fee of ISK8,000 (about US$70). (Id. art. 25.) Violations of the rules can result in administrative fines ranging from ISK10,000-1 million (about US$90-9,000). (Id. art. 22a.) In the same legislation, the Icelandic Parliament has amended the rules for licensing of restaurants in an effort to better accommodate tourists by no longer requiring licensing for restaurants that do not serve alcohol. (Id. art. 3; Press Release, New Legislation on Home Sharing to Take Effect in Iceland (June 22, 2016), Ministry of Industry and Innovation website.)

The amended law will come into effect on January 1, 2017. (Act on Amending the Act on Restaurants, Lodging and Entertainment, art. 24.)


According to the Ministry of Industry and Innovation, the legislation comes as a response to the recent increase in private rentals of property, known as home-sharing arrangements, in Iceland. (New Legislation on Home Sharing to Take Effect in Iceland, supra.)

Iceland has seen a boom in tourism in recent years, and the tourism industry has called for the building of more hotels to accommodate the tourists. (Tourism in Iceland: “We Need More Hotels,” ICELAND MONITOR (Sept. 21, 2016).) However, the push for new hotels has not been welcomed by all. The Mayor of Reykjavik, Dagur B. Eggertsson, has instead proposed rules to limit the number of new hotels built in downtown Reykjavik as a response to the increase in home-sharing arrangement. (Paul Fontaine, Mayor Considering Downtown Hotel Upper Limit, GRAPEVINE (Aug. 18, 2016).)

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