How to Buy a Home in Iceland

Buying a home in Iceland can be an exciting prospect for expats, offering a chance to own a piece of the country's stunning natural beauty. However, the process can be complex, with various legal and financial considerations to take into account. This guide aims to provide a comprehensive overview of the key aspects of buying a home in Iceland, from finding properties for sale to understanding the role of a lawyer in the process.

How do I find houses for sale in Iceland?

There are several online portals and real estate agencies that list properties for sale in Iceland. Websites like MBL.is, Visir.is, and Eignin.is are popular platforms where you can find a wide range of properties listed for sale. Additionally, you can engage the services of real estate agents who can help you find a property that suits your needs and budget.

Are there restrictions on foreigners owning property in Iceland?

Yes, there are restrictions on foreigners owning property in Iceland. Non-residents need to obtain permission from the Ministry of Justice to buy property. However, citizens of EEA (European Economic Area) countries are exempt from this requirement. It's also worth noting that this process can be time-consuming and requires various documents, including a detailed description of the property and a confirmation of payment capability.

Does Iceland have an MLS type system?

Iceland does not have a Multiple Listing Service (MLS) system like the one in the United States. Instead, properties are listed individually by real estate agents or directly by the owners on various online platforms. This means that buyers may need to check multiple sources to find all available properties.

Do brokers have licenses and how do I know if they are licensed?

Yes, real estate brokers in Iceland must be licensed. The Icelandic Chamber of Commerce issues these licenses, and you can verify a broker's license by contacting the Chamber directly or checking their online registry. It's important to ensure that any broker you work with is licensed to protect your interests.

What documents are required when buying a home?

When buying a home in Iceland, you will need several documents. These include a valid ID, proof of address, proof of income, and a credit report. If you're a foreigner, you'll also need permission from the Ministry of Justice, which requires additional documents like a detailed property description and proof of payment capability.

Do I need a lawyer when buying a home in Iceland?

Yes, it's highly recommended to hire a lawyer when buying a home in Iceland. A lawyer can help you navigate the legal complexities of the process, ensure all documents are in order, and protect your interests. The cost of a lawyer can vary, but you should budget for around 1-2% of the property's purchase price.

Do people typically buy a property with all cash or take out a mortgage?

Both options are common in Iceland. Some buyers choose to pay in cash, especially if they're buying a lower-priced property. However, many people take out a mortgage. Banks in Iceland typically lend up to 70% of the property's value, with the buyer providing the remaining 30% as a down payment.

Are there inspections that take place, and if so what is that process like?

Yes, property inspections are a standard part of the home buying process in Iceland. A professional inspector will examine the property for any structural issues, necessary repairs, or potential problems. The buyer typically pays for this inspection, and the results can be used to negotiate the final purchase price.

What are some of the pitfalls to avoid when buying property in Iceland?

One of the main pitfalls to avoid is rushing into a purchase without doing thorough research. This includes understanding the local property market, checking the property's condition, and ensuring all legal and financial aspects are in order. It's also crucial to verify the broker's license and hire a reputable lawyer. Lastly, be aware of the restrictions on foreign property ownership and ensure you have the necessary permissions before proceeding with a purchase.