In Iceland, short-term rentals are commonly known as "skammtímaleiga" in Icelandic, translating directly to "short-term rental" in English. On popular booking platforms like Airbnb, Booking.com, and Vrbo, these rentals are often labeled as "vacation rentals," "holiday rentals," or "tourist accommodations." In Icelandic law, short-term rentals refer to the rental of furnished accommodations for less than 90 days, often in private residences or secondary properties, allowing tourists to experience local hospitality. These rentals vary in form, from a single room in a Reykjavik apartment to an entire cabin in the Icelandic countryside.

Yes

Currently, there are no nationwide restrictions in Iceland on the maximum length of stay that a guest can have in a short-term rental, provided the rental complies with the licensing limits on total rental days per year. However, local authorities in cities like Reykjavík and Akureyri may impose their own duration limits to regulate the impact on the housing market and ensure availability for long-term residents.

For example, Reykjavík restricts non-licensed properties to a maximum of 90 rental days annually. Akureyri also has similar policies but may vary the rental day cap depending on the type of property (e.g., private home rentals versus dedicated rental units). These local caps aim to prioritize housing availability for local residents, especially in densely populated or tourism-heavy areas.

Iceland mandates strict health and safety standards for short-term rentals to ensure guest safety and well-being. Hosts are required to comply with national fire safety regulations, which include the installation of smoke detectors, fire extinguishers, and clearly marked escape routes in all rental properties. Additionally, hygiene and sanitation standards, such as clean bedding, waste disposal, and basic cleaning protocols, are enforced by the Icelandic Directorate of Health.

Iceland may impose additional regulations on short-term rentals to manage increased visitor inflow. For instance, during the Reykjavík Culture Night or major national holidays, local authorities may implement restrictions such as:

• Temporary Limits on Rental Days: Hosts may be limited in the number of nights they can rent their property to prioritize housing for residents.
• Stricter ID Verification: Enhanced ID checks may be required to prevent overcrowding and maintain security.
• Noise and Curfew Rules: To minimize disturbance, stricter noise ordinances and curfews are often enforced in popular areas.

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In Iceland, property owners must register their short-term rental properties with a central government database and, in many cases, obtain a permit to operate legally. The Icelandic Housing Agency manages the national registry for short-term rentals, ensuring each property meets regulatory standards for safety, tax compliance, and community impact.

The Permit is to be renewed annually.

Process for Obtaining a Permit

To obtain a permit, property owners must submit an application through the Icelandic Housing Agency’s portal. The application typically includes proof of ownership, a zoning compliance certificate, and, if applicable, a local municipal permit. Fees for permits vary by municipality and property type but generally range from 20,000 to 60,000 ISK.

Additionally, owners must provide documentation of safety compliance (e.g., smoke detectors, fire extinguishers) and property insurance. The Icelandic Housing Agency inspects the property to ensure it meets national safety and zoning standards before issuing the permit.

In Iceland, short-term rental operators can find support through industry associations and tourism organizations that provide resources and advocacy for the STR community. Although there isn’t a dedicated national association specifically for short-term rental owners, the Icelandic Tourist Board and Icelandic Travel Industry Association (SAF) serve as key resources.

These organizations offer support in areas such as best practices for sustainable tourism, compliance updates, and marketing strategies. They also provide a network for property owners to connect with industry professionals. Non-resident owners interested in joining these associations may have membership requirements, including fees, and access to Icelandic regulatory guidance for skammtímaleiga operations.