Reykjavík Grapevine - Jan 2021, Page 9

9 The Reykjavík Grapevine
Issue 01— 2021
are, feedback from prospective tenants
is often shut down with the admon-
ishment from group admins that if
someone has objections with the list-
ing, they can simply keep scrolling. At
the same time, a common response to
“the asking price is too high for this
kind of property” is that the “market
will decide” how much rent any given
property can demand—raising ques-
tions about how what is considered fair
rent can be determined without renter
feedback.
There is a fallacy hidden in this
notion that renters on the open
market decide how high the rents can
go. Unlike a manufacturer of goods, a
property owner is not mass produc-
ing apartments on an open market
competing with other mass producers;
most times they are offering a single
space. The property owner, in a posi-
tion where demand vastly exceeds
supply, is also not trying to appeal to
hundreds or thousands of custom-
ers to buy enough of their products
to keep their business afloat. A prop-
erty owner has a single unit and only
needs one person to agree to the price.
According to a Zenter poll conducted
for Íbúðalánasjóður in 2018, the largest
proportion of renters (35.1%) are rent-
ing from a single property owner; only
15.7% rent from an established rental
company. This same poll showed that
rental prices from individual property
owners also tend to be much higher
than those from other sources. It also
bears mentioning that while a manu-
facturer sells a single unit once, a
tenant buys a property owner’s “prod-
uct” over and over, month after month,
with the price almost always rising.
The “market” is clearly not deciding
how much can be charged for any given
property; the person capable of paying
the most for the least on offer decides.
When rental properties can adver-
tise without disclosing the price, rent-
ers cannot provide public feedback on
the asking price, so when the single
highest bidder—not prospective rent-
ers as a whole—determine what the
highest rent can be, it stacks the deck
against other prospective renters.
Further muddying the waters is that
available data on how much rent in
Reykjavík has grown over the years—
and it has nearly doubled since 2011—
is based solely on properties that have
registered with the district commis-
sioner. Many renters, immigrants
especially, live in places that are not
registered, sometimes without even
a valid contract. With that being the
case, the real average cost of rent of
Reykjavík is hard to determine, as a
wide swath of properties being rented
are not being factored into the total.
Why not just buy an
apartment?
Icelandic culture leans heavily towards
buying properties rather than renting
them, so often times people are advised
to buy apartments as a solution for
getting out of the cycle of renting.
However, this is not exactly an
option for people who have newly
arrived in the country. Furthermore,
there is a vicious circle that arises for
immigrants, who are more often than
not minimum wage earners.
As rent in Reykjavík can be at least
50% of a person’s salary—and for mini-
mum wage workers, even more—it is
all too easy to fall behind on paying
bills. Doing so, however, puts the
debtor on a credit black list, which then
automatically disqualifies them from
being able to take out a loan to buy an
apartment.
Laufey Líndal Ólafsdóttir, who is
on the board of social housing for the
city, Félagsbústaðir, and lives in social
housing herself, succinctly answered
the question of why more people don’t
simply buy apartments.
"Because they're not allowed to,”
she told us. “They don't get the loans
that they need. There's no programme
for social lending in this country." You
cannot qualify for loans if you're on the
black list for not paying bills, which is
more likely to happen if you're making
minimum wage. And you’re more likely
to be a minimum wage worker if you’re
an immigrant. "This puts you on the
rent market. As usual, being poor is
more expensive than having money.
This is why the poor keep being poor.
It's the poverty trap."
Renting from your boss
One experience unique to immigrants
to Iceland is the prospect of rent-
ing housing being provided by your
employer. The quality of these places
can vary, but they have far too often
come up in the news for being over-
priced and in poor condition. One
prime example was in an investiga-
tive news story by Kveikur concerning
largely Romanian workers. Up to ten
workers at a time shared a single room,
with each one of them paying 50,000
ISK per month for this rudimentary
shelter. Furthermore, they typically
worked 220 hours per month, six days
a week, for salaries that were far below
the minimum wage. One of the work-
ers interviewed said that after rental
deductions and other charges he was
paid a paltry 38,000 ISK for two weeks
of work.
But the most notorious example is
Bræðraborgarstígur 1, which in June
“If an Icelandic person is having
certain problems [with the
rental market], the problems
are not going to be less for the
immigrant.”
Laufey Líndal Ólafsdóttir, Member of Félagsbústaðir
2020 was set ablaze by a tenant, kill-
ing three and leaving many more with-
out a home. Apart from not even being
registered as a residential property,
making it illegal to rent the place out
for people to live in, some 73 people
were registered as living at the prop-
erty, although the real number was
likely close to a dozen. In 2015, Stun-
din interviewed a former resident of
the house, who described the house as
dilapidated, infected with mold and
housing mostly foreign workers who
paid as much as 90,000 ISK per month
in rent for a small room, with no fire
exit apart from the main entrance.
In 2018, journalist Eiríkur Jónsson
also reported on the unsanitary living
conditions visible even from outside
the house.
Sanna Magdalena Mörtudóttir,
who is the Socialist Party representa-
tive for Reykjavík City Council, in fact
cites company housing first amongst
the challenges immigrants face on the
rental market.
“Then you have to rely on your boss
for both work and housing,” she points
out. “I've seen cases where money for
the housing is taken out of wages.
Bosses may say 'this is something they
chose and are OK with', but at the same
time, if you're put in that situation, if
you quit your job, are you also going
to lose your home? Should they not
be separate? Even if it's not illegal, it's
definitely unethical."
Ignorance not just of the law but
also of social norms contributes to
this.
"People are coming to the coun-
try, maybe not knowing a lot about
the country and think this is normal,
maybe you don't want to upset your
boss,” she says. “You're supposed to
be paying people who work for you in
money; not in something else. These
two things need to be totally separated.
It could be so dangerous, so many
people living in one place. I think the
city needs to take more action into
this."