Reykjavík Grapevine - jan 2021, Qupperneq 10

The AirBnb Effect
While the pandemic has effectively
torpedoed the market for AirBnB prop-
erties this year, in normal situations
these properties can have an outsized
impact on the rental market.
As one example, the law caps the
amount of time per year that a prop-
erty owner can rent their property on
AirBnB to 90 days. While this sounds
reasonable enough, a side effect of
this is that it has become increasingly
difficult to find renewable, 12-month
contracts. Before the pandemic, it was
very common to see properties being
offered for rent specifying “available
until June”, which is typically the start
of the tourist high season. This put
renters in greater housing precarity;
instead of being able to live in the same
property, year by year, many renters
face the prospect of having to find a
new place to live at the start of each
summer.
AirBnB had broader effects as well.
Ólafur Heiðar Helgason from the Hous-
ing Financial Fund (HFF), found that
AirBnB has contributed to apartment
prices increasing by 5% to 9% from 2015
to 2017. Ólafur added that landlords
can often make twice the amount on
Airbnb that they would make renting
their properties out to locals, under-
cutting incentives to provide housing
for people who actually live here.
“The effect of AirBnB on the increase
of property values are twofold,” a
report from Arion Bank noted in 2017.
“First of all, it leads to an increased
expectation of profit for renting a
room or apartment in that people are
ready to pay a higher amount. Second
of all, AirBnB reduces the supply in the
apartment market. The first effect is
difficult to quantify but carries with it
the great increase of property values in
downtown Reykjavík.”
And that’s just largely counting the
landlords who are abiding the law.
60% of landlords using AirBnb beyond
the 90-day limit did not register their
properties as a vacation rental, depriv-
ing Reykjavík of millions in revenue
— all these factors combined, it can
make renting out properties through
Airbnb far more lucrative for local
landlords than providing housing for
the already-choking rental market.
Laufey notes that in areas where
AirBnb is dominant, "I can safely
say that there are not as many chil-
dren in Austurbæjarskóli (a down-
town elementary school) for example,
because the families have moved away.
A lot of families moved out of down-
town during [the boom time of AirBnb]
because there were so many problems
around AirBnB properties, such as the
noise and there being no neighbours;
just people coming and going 24 hours
a day."
Social housing
Social housing is a very common
phenomenon across Europe, but
Iceland is exceptional in this regard,
in that qualifying for social housing is
extremely difficult and the wait is very
long.
Sanna says that there are some 500
people on the waiting list for social
housing. The wait can last for about
three years, although sometimes less,
but they need to have lived in Reykjavík
for a year to even begin to qualify. "So
a lot of people are renting on the black
market, because they can't rent a single
flat that might be 180,000 to 200,000
ISK per month, because that would be
pretty much all of their salary. When
they rent on the black market, they're
not eligible for rent assistance," as it is
dependent on the property being regis-
tered.
Laufey, who being on the board of
Félagsbústaðir understands the situ-
ation intimately, has criticisms of her
own.
“As long as it's run as an indepen-
dent body, although owned by Reyk-
javík City, the funds and operations
are in the hands of the company,” she
says. “Their only ‘controllable’ source
of income is rent, so if there are losses,
their only means of meeting that is
increasing rent. We have been calling
for more cooperation between the City
and the team of Félagsbústaðir, which
has increased a lot, but we feel it's a
crazy set-up. The tenants are among
the city's most financially vulnerable
people and the last thing they need
when times get hard for Félagsbústaðir
is for their rent to go up.”
“And like I was saying about
the housing benefit system, this is
supposed to be the tool to protect
people who are renting, both within
the social system and outside it,” she
continues. “This is simply not work-
ing as the system has too many flaws
and obstacles. The rent for tenants
of Félagsbústaðir is lower than that
on the free market but it's still high,
considering the tenant’s income. The
tenants are mostly minimum wage
workers and people on social benefits…
The criteria for qualifying for social
housing is being not only financially
vulnerable, but also socially vulnera-
ble, so many of the tenants come from
poor or working class backgrounds,
are immigrants, have poor safety-nets
and many are also dealing with health
issues that limit their options on the
job market. Some form of rent control
would obviously be needed to protect
people who rent in general, but I think
this is a decision for Parliament to
make and there has been a reluctance
to discuss this as it has been heavily
opposed by the right wing.”
All this can be fixed
The solutions to these problems are
many, requiring concerted effort from
both the City of Reykjavík and Parlia-
ment. A lot of that goes towards educa-
tion for immigrants on what their
rights even are.
"It should be that when you first
arrive in the country, the first thing
you get in your hands is contact infor-
mation for your union representative
and a printed sheet of your rights,”
Sanna offers. “If it isn't clear already,
put it into the law that if you're rent-
ing from someone you're working for,
they cannot take the money for the
rent from your salary. It should be
the worker's right to get the bill and
pay it, instead of someone with so
much power taking money out of their
salary."
Laws on suitable housing apply to
company housing as well, she says, but
"the reason why it's so difficult to make
sure that this housing follows the law
is that it's not our house. We can't just
like storm in and check that it's all suit-
able. But it should raise a red flag if in
the National Registry there are over 70
people registered in one house or flat.
The municipality should get a notifi-
cation saying 'this doesn't add up, you
should do a house call'. But right now,
you can just register your home as
being anywhere."
"I think we have all the answers of
what needs to be done,” Sanna contin-
ues. “I don't understand why it's so
difficult to implement it into law. Why
can't we just knock on the door and
say, 'Hey, there's a lot of people regis-
tered here, and we've been getting
complaints and tips from neighbours
that this place needs to be fixed up. Can
we just take a look inside?' I know we
need to respect people's privacy, but
why can't we establish regulations to
watch people's safety, to prevent some-
thing like this?"
Overall, Sanna would also like to see
an expansion of social housing.
“Housing needs to become more
social,” she says. “We have social hous-
ing for the most vulnerable in our soci-
ety, but in other countries, it's more
common and available to other groups
in society. Make it more available so
that people aren't forced to live in a
situation that is dangerous. The city
and the national government has a lot
of responsibility to socialise housing.
It's a commodity now, but it shouldn't
be."
Sanna adds: "I want to stress that
it shouldn't be the job of immigrants
to tell us what needs to be fixed, but
I would be glad to see, instead of us
politicians saying 'this and that needs
to be done', if we could see the direct
voice of immigrants that want to tell us
what needs to be fixed—if they could
do that, I think that's the best thing
really."
"We need more social housing
and more options for people on a low
income. It should be available to a
broader expanse of people—more like
what we see in Europe. It's terrible to
be on the free market and have a family
and you have a short-term contract.
It's a terrible insecurity to never know
where you're going to be next year. The
free market is not working as a solu-
tion. They're not building what we
want fast enough. Obviously, whatever
is being done now is not enough."
In the end, while all low income
workers on the rental market in Reyk-
javík face challenges, immigrants are
always going to be more vulnerable.
As Laufey points out, "If an Icelandic
person is having certain problems
[with the rental market], the problems
are not going to be less for the immi-
grant. You have xenophobia adding
to the myriad things that affect all of
us." Still, there are at least practical
solutions that can be taken to ensure
housing for all of Iceland’s residents,
foreign-born and domestic, provided
the political will is there.
10 The Reykjavík Grapevine
Issue 01— 2021
Sanna Magdalena Mörtudóttir, Socialist Party City Councilperson

“The city and the national
government has a lot of respon-
sibility to socialise housing.
It's a commodity now, but it
shouldn't be.”