Published on and written by Cyril Jarnias
Relocating to ICELAND, buying an apartment in Reykjavik or a house with a mountain view, investing in commercial premises or in a residence for tourist rental: whatever the project, the choice of a local real estate agency is strategic. The Icelandic market, highly regulated and promising, is also complex, with high prices, specific rules for foreigners, and a demanding legal framework for professionals.
This article offers a breakdown of the Icelandic real estate market, detailing how it works, the obligations of agents, the fees to expect, and the positioning of the main local agencies. It also explains how a buyer, Icelandic or foreign, can secure their transaction by relying on the best professionals in the sector.
A dynamic, expensive… and highly regulated Icelandic real estate market
The Icelandic residential market is driven by structurally strong demand and limited supply, especially in the capital region. About two-thirds of the population live in the Reykjavik urban area, which logically concentrates transactions and price pressures.
Available data shows a rapid increase in values: some professionals estimate that average housing prices have jumped by about 70% in five years and by 45% in three years. Other indicators confirm this trajectory: in the recent period, the national residential price index has continued to rise significantly, with increases close to 8% year-on-year on several occasions, although the pace is beginning to slow.
The average price of a single-family home in the Icelandic capital region now exceeds 140 million ISK.
ICELAND also remains attractive for rental investment. Average gross yields are around 5.2% nationwide, and about 4.9% in the capital, with strong disparities depending on neighborhoods and property type. Population growth, driven notably by immigration and the tourism boom, sustains strong demand for long-term rentals, but also for short-term rentals in tourist areas.
A housing supply under pressure
Supply cannot keep up with the pace. The number of new housing units delivered is increasing but remains insufficient in the long term. In 2024, nearly 3,500 new homes were completed, up from the previous year, and the housing authority (HMS) forecasts over 3,000 deliveries per year in the short term. However, the number of projects under construction is declining and should result in fewer completions from 2026 onward, especially in the Reykjavik region.
Approximately 4,000 homes were for sale in the greater capital region in early spring 2025.
In this tight context – strong demand, constrained supply, long administrative delays – the role of local agencies becomes central to correctly valuing a property, organizing marketing, and securing transactions.
A strict and protective legal framework
Unlike many countries, real estate brokerage in ICELAND is a highly regulated profession with a specific status. Real estate agents – the löggiltur fasteignasalar – have a quasi-“public” role: the law grants them a status close to that of magistrates in the context of transactions, in the name of the public interest. They must protect both the buyer and the seller, guarantee the legal validity of contracts, and ensure compliance with anti-money laundering rules.
To become a certified agent, a specialized university-level education of about one year is required, covering various real estate fields. Obtaining the license requires passing an official exam, being at least 20 years old, mastering Icelandic, having a clean criminal record, not being bankrupt, and completing a practical internship.
Licensed professionals are then subject to regular supervision: control of escrow accounts, verification of professional liability insurance, inspections at least every three years, possible sanctions (warning, license revocation) in case of non-compliance. The Association of Real Estate Agents complements this system with a code of conduct, mandatory continuing education – notably on anti-money laundering – and a consumer assistance service.
This system translates concretely into a high requirement for all serious agencies: meticulous documentation, transparency of information provided in “sales sheets”, secure management of client funds, and diligence obligation in drafting offers and contracts.
How much do a real estate agency’s services cost in ICELAND?
Agency fees constitute a significant item in a transaction, but they are part of a broader set of costs: taxes, registration, possible attorney fees, inspection, etc.
Commissions and ancillary fees
Commissions for Icelandic agencies generally range between 2% and 3% of the final sale price, most often borne by the seller. Some sources mention a possible range between 1.5% and 2.5%, which corresponds to observed practices for standard mandates.
Agencies may also charge for:
A real estate agency’s fees typically include three main elements: a valuation package, which corresponds to a detailed property appraisal; administrative fees for managing documents and procedures; and advertising costs for distributing listings, producing professional photos and videos, and promoting the property on real estate portals.
For a buyer who uses an agent specifically mandated as a “buyer’s agent”, separate fees are possible, often calculated as a percentage of the acquisition price.
Brokerage services are in principle subject to Icelandic VAT, which is added to the commission amount.
Other transaction costs
In addition to the agency’s remuneration, the purchaser bears several cost items:
| Cost Item | Approximate Amount (Buyer) | Main Remarks |
|---|---|---|
| Transfer Tax / Stamp Duty | Approx. 0.8% to 1.6% of value | Levied upon registration, borne by buyer |
| Notary Fees | Approx. 0.1% | Formal deed review, assignment of rights |
| Registration Fees | Approx. 0.1% of value | Registration in the official land registry |
| Possible Legal Fees | 0% to 1% | If the buyer retains an attorney |
| Agency Commission | 2% to 3% (usually seller) | Sometimes 1.5%–2.5% depending on agencies |
In total, the “roundtrip cost” (cumulative purchase + resale cost) is generally estimated between 2.4% and 5.2% of the property price, excluding capital gains taxation and recurring property taxes.
The concrete role of local real estate agencies
Behind these percentages lie very extensive services. A typical mandate with a Reykjavik agency covers much more than the simple listing of advertisements.
The agent begins by evaluating the property, relying on databases of recent transactions and their deep knowledge of the neighborhood. The goal: set a realistic price that allows for a sale within a reasonable timeframe without underselling the property. In a tight but closely watched market, overvaluation is costly: a property that stays on the market too long quickly sees buyers negotiating downward.
A real estate agency handles the complete preparation of a property for sale. This includes taking professional photographs, sometimes a video and virtual tour, as well as writing the listing in Icelandic and often in English. It also verifies permits and work done, and collects condominium documents. Then, it publishes the listing on the main portals, primarily on Fasteignir.is – a platform reserved for certified professionals – and in the real estate sections of major media like Morgunblaðið.
During the marketing phase, the agent organizes private viewings or open houses, responds to information requests, keeps the seller informed of feedback, and manages offers. As soon as a buyer comes forward, the agent is obligated to draft an offer proposal, with clauses tailored to the situation (financing, work to be done, vacancy periods, etc.) and to present it to the seller.
Once the offer is accepted, the agency drafts and registers the sales contract (kaupsamningur), manages banking aspects (loan transfers, guarantees), and supervises the transaction until the handover of keys. Funds go through a controlled escrow account. The agent must also apply anti-money laundering due diligence obligations: identity verification, source of funds, and reporting to authorities if necessary.
In more complex cases – chain sales, acquisitions by companies, purchases by non‑residents subject to ministerial authorization – this “orchestrator” role becomes decisive.
Overview of the main local agencies and players
Among the multitude of agencies present in the Icelandic market, some stand out for their scale, specialization, or international positioning. Here is a focus on several reference players, often recommended for large-scale projects or foreign buyers.
Croisette | Knight Frank: the interface between ICELAND and major international markets
Croisette | Knight Frank operates in ICELAND from an office located at Bryggjugata 2, in the heart of Reykjavik (101 Reykjavík). The group, headquartered in Malmö, is active in Sweden, Denmark, Finland, and ICELAND, in both residential and commercial segments.
Its positioning is clearly that of a high-end international player: buying and selling homes, marketing new developments, rental and commercial transactions, valuation and strategic advice for high-visibility or atypical properties. The agency offers oral or written valuations, collaborates with developers on construction projects, and accompanies institutional or private investors on complex deals.
The strength of Croisette | Knight Frank also lies in its research network: the company produces global analyses (like The Wealth Report or the Prime Global Forecast Report) and podcasts on real estate trends. For a wealthy foreign buyer looking to compare Reykjavik with other Nordic capitals, this type of comparative data can influence the decision.
Examples of areas of operation
The listings associated with Croisette | Knight Frank cover a great diversity of locations: central Reykjavik, but also Seltjarnarnes, Selfoss, Hafnarfjörður, Hvolsvöllur, Kópavogur, the Snæfellsnes peninsula, or locations near iconic sites like Thingvellir National Park. This national coverage makes it a prime contact for anyone wishing to diversify between urban, secondary residential, and tourist real estate.
Húsaskjól: the boutique agency for meticulous property staging
Húsaskjól, based at Hlidarsmari 2 (5th floor) in Kópavogur, defines itself as a “boutique” agency: less focused on transaction volume than on service quality and personalization. The company emphasizes the idea of “exceeding its clients’ expectations” and relies heavily on property presentation.
Húsaskjól mobilizes a team of professionals to prepare and enhance your property, maximizing its impact on portals.
Properties are staged to enhance spaces and create an immediate appeal for potential buyers.
Each property is photographed from its best angles for an optimal and attractive visual presentation.
Some properties receive videos to provide an immersive and dynamic tour of the property.
Writing of detailed descriptions highlighting the specific features and strengths of the apartment or house.
The agency manages the entire administrative process: drafting sales contracts, relations with municipal services for registrations, coordination with banks for financing. It also has a significant database of potential buyers, automatically cross-referenced with new listings to accelerate matches.
Húsaskjól offers several commission formulas – four different packages – allowing the seller to choose between more or fewer services (e.g., intensity of the communication campaign and staging) based on budget and property type.
RE/MAX Iceland: the power of a global network
The RE/MAX brand is one of the largest real estate franchise networks in the world, and ICELAND is no exception with RE/MAX Iceland. Its main office is at Skeifan 17, in the Skeifan neighborhood of Reykjavik (108 Reykjavik). The network highlights a team of experienced agents capable of handling all types of projects: buying, selling, sometimes renting.
For a foreign investor, particularly North American or European, the RE/MAX network offers the advantage of a familiar brand and processes similar to those in their home country. In Iceland, this combines with the expertise of local professionals, necessarily licensed according to the country’s standards and regulations.
RE/MAX Iceland is also very present online – its website is one of the most visited real estate portals in the country – which maximizes the visibility of listed properties and facilitates remote searches.
Landsbankinn Real Estate: the strength of a major banking group
Landsbankinn is one of Iceland’s main banks. Through its real estate branch, Landsbankinn Real Estate, it combines two essential components: connecting with properties for sale and proposing financing solutions (mortgages, specific products for first-time buyers, etc.).
For a local buyer, using an entity linked to their bank can simplify procedures: the structure already knows their situation, history, and can quickly adjust loan simulations. For a foreigner who meets the criteria for Icelandic credit access, having a single point of contact to find a property and set up the financing file can also be an advantage.
Alafoss and Eignarhútir: Everyday expertise
Alafoss and Eignarhútir are two Icelandic agencies with a strong local dimension. The first specializes in residential and commercial properties in Reykjavik and neighboring municipalities, with a team that knows the neighborhoods, market prices, and ongoing urban planning projects very well. The second is known for its highly personalized service and broad geographic coverage, from small city apartments to country houses.
These firms cater to both Icelanders and foreigners already familiar with the country, who seek local support rather than an international showcase. Their main asset is their ability to capture properties sometimes less visible on major portals and to be particularly responsive in a real estate market where good opportunities go very quickly.
Pálsson Real Estate: the perspective of a high-profile expert
Pálsson Real Estate, founded and led by Páll Pálsson, illustrates another facet of the landscape: an agency driven by a recognized personality. Páll Pálsson has over six years of experience in the Icelandic market and as much in the Spanish market, and claims to have worked with investors from over a dozen countries. He is regularly sought by major Icelandic media – public radio RÚV, newspapers like Morgunblaðið or Viðskiptablaðið, news portals like Vísir – to comment on price trends and market conditions.
His agency handles apartments, single-family homes, commercial buildings, and vacation homes, mainly in the Reykjavik region, but also in Reykjanes, Akranes, and the south of the country. Careful marketing (photos, video, social media), personalized follow-up, a culture of long-term relationships with clients: the firm positions itself both as a transaction intermediary and as a strategic advisor for investors who want to calibrate their purchases to Icelandic market cycles.
How to choose the “best” local agency for your project in ICELAND
There is no single “best” agency for everyone, but rather agencies more or less suited to a client profile, budget, property type, and degree of legal complexity. To make an informed choice, several criteria are essential.
Geographic specialization and property typology
In a market as contrasted as that of ICELAND – hyper-tight Reykjavik, growing Akureyri, very affordable but remote Westfjords, tourist areas like the Snæfellsnes peninsula or Húsavík – the first question to ask is about the target area.
An agency well-established in Reykjavik, with a solid track record in central streets (Laugavegur, old harbor, Hlíðar, etc.), will be more relevant for an urban apartment than for an eco-lodge project in the Westfjords. Conversely, a player showing many recent sales in localities like Selfoss, Hella, or Hvolsvöllur will have an obvious advantage for a rural purchase or a vacation home.
Icelandic real estate agencies often specialize by market segment. Some, like Croisette | Knight Frank, Reitir (development and operation), or Landsbankinn teams, are recognized for commercial mandates (offices, shops, hotels, warehouses). Others, like Húsaskjól or Alafoss, primarily target the residential market.
Level of support and services offered
The needs of an Icelander selling their apartment to buy a house in the same urban area are not those of a foreign investor who does not speak the language and must also obtain ministerial authorization to acquire land.
Some clients will mainly look for a good price and maximum visibility on Fasteignir.is; others will need near turnkey support: organizing remote viewings, thorough verification of the legal situation (easements, rights of way, permits), referral to contractors, advice on seasonal rentals, handling of procedures with the Ministry of Justice.
Agencies differentiate themselves precisely by the extent of their services:
| Type of Service | Agencies that commonly offer it | |
|---|---|---|
| Valuation and price advice | All licensed agencies | |
| Staging, pro photos, video | Húsaskjól, Pálsson Real Estate, many urban players | |
| International investment advice | Croisette | Knight Frank, RE/MAX Iceland, Pálsson Real Estate |
| Property Management / Leasing | Some commercial agencies, IQI Iceland, major networks | |
| Financing advice and banking products | Landsbankinn Real Estate, other banks and credit institutions | |
| Specific follow-up for foreigners | Agencies accustomed to non-resident files, often Reykjavik-centered |
During initial discussions, it is therefore crucial to detail your expectations and verify point by point what is actually included in the commission, and what could lead to additional fees.
Transparency of fees and experience with foreign client files
The commission structure is theoretically free, but practice revolves around 2% to 3%. Most importantly, for a client, is to obtain a clear written proposal: percentage, possible minimum flat fee, ancillary fees, payment terms, and conditions if the sale does not materialize.
For a non-Icelandic buyer or seller, it is crucial to verify that the real estate agent has already completed transactions for foreign clients in similar situations (EEA/EFTA area or outside, residence in Iceland or not, local financing or not, acquisition via a company, etc.). An agent unfamiliar with specific rules for non-residents, such as the law on foreign ownership rights and the Ministry of Justice authorization procedure, can cause delays and errors in the file.
Buying a property in ICELAND as a foreigner: why the local agency is indispensable
ICELAND allows foreigners to own real estate, but under conditions. Nationals of European Economic Area or EFTA states who are legally domiciled in the country enjoy acquisition rights close to those of Icelandic citizens. For others, a green light from the Ministry of Justice is generally required, except in very specific cases (short-term leases, for example).
The agency plays a key role at several stages:
To acquire real estate in Iceland, EEA/EFTA citizens domiciled in the country must first determine if their project falls under the free regime or requires authorization. They must then prepare a complete file for the ministry, including a description of the property and a justification of the project (residential use, recreation, economic activity…). It is imperative to respect area limitations: maximum 3.5 hectares for non-commercial use and 25 hectares for professional activity. Finally, sending the original documents, accompanied by official translations if necessary, must be coordinated.
The processing time can range from three to ten weeks depending on the complexity. During this time, the agent must secure the transaction with appropriate contingency clauses in the contract, to protect both the seller (who does not want to tie up their property indefinitely) and the buyer (who does not want to lose their deposit if authorization is denied).
After purchase, several steps are essential: obtaining the Kennitala (Icelandic ID number needed for bank account, work, and social security), opening an account, formalities for a residence permit in case of stay over three months, and negotiating a local loan under conditions (income, down payment, guarantees).
Without a strong local agency, and without the complementary support of an attorney or tax advisor if needed, the probability of errors increases significantly.
Some benchmarks on prices and profitability, to frame your project
In a market as dynamic as ICELAND, it is useful to have some points of comparison, to be articulated with the agent’s estimates.
In terms of capital, the average purchase prices are among the highest in the country: average transaction amounts there far exceed those in rural areas, with single-family homes reaching values over 1 million dollars equivalent, and apartments above $500,000. Neighboring municipalities (Kópavogur, Hafnarfjörður, Mosfellsbær) offer more affordable levels, but the increase has been strong in recent years.
On the outskirts of the capital region, average prices are lower but experience solid growth. In rural areas, amounts are significantly lower, with varying dynamics: the Westfjords remain historically very affordable, while equipped towns like Akureyri record faster value increases.
On the rental side, the rise in rents is even faster than that of the general price index. In the capital region, rents have seen double-digit increases year-on-year, driven by the scarcity of supply, the cost of credit, and the growing demand from immigrants and young professionals. Leases are very often indexed to the consumer price index, which mechanically increases rental income value over time, but also increases costs for renting households.
The average gross yield of 5% hides gaps: it is lower in sought-after Reykjavik neighborhoods and higher in tourist areas or regional towns where prices are less tight. A local agency can accurately estimate net yield by including taxation, vacancy, and charges.
Why local agencies remain essential in a changing market
Data on interest rates, prudential rules, and credit activity show that the Icelandic market is in a phase of rebalancing: the central bank’s policy rates have started to decrease after a tightening cycle, inflation is slowing, demand remains strong but financing conditions are gradually improving. Mortgage loan volumes are picking up again, with a notable preference for inflation-indexed loans but also renewed interest for non-indexed loans as rates fall.
More than 7,100 real estate companies will be listed in 2025, up more than 8% per year since 2020.
The strongest agencies have in common: the ability to quickly adapt their strategies and constant innovation in their services.
– a team of licensed and regularly trained agents;
– rigorous compliance procedures (AML/KYC, escrow account management, internal control);
– a market analysis capability fueled by data (price indices, HMS reports, studies by banks or international organizations);
– a culture of transparency towards clients (explanation of fees, risks, deadlines, legal obligations).
To buy or sell a property in Iceland, it is crucial to rely on a local agency. The market is demanding in terms of price and regulation. A local agency allows you to bridge the gap between the system’s constraints and your objectives, whether for a first apartment in Reykjavik, an office building, or a vacation home by a fjord.
By relying on players like Croisette | Knight Frank, Húsaskjól, RE/MAX Iceland, Landsbankinn Real Estate, Alafoss, Eignarhútir, or Pálsson Real Estate, the serious investor has a solid foundation to navigate an Icelandic market that is both promising and technically sophisticated. The professionalism requirement imposed by law and the richness of available market data offer a rare investment landscape: structured, transparent, but reserved for those who accept to play by the right rules and with the right partners.
A French business owner, around 50 years old, with a financial portfolio already well-structured in Europe, wanted to diversify part of his capital into residential real estate in Iceland to seek rental yield and exposure to the Icelandic króna. Allocated budget: 400,000 to 600,000 euros, without recourse to credit.
After analyzing several markets (Reykjavik, Kópavogur, Hafnarfjörður), the chosen strategy consisted of targeting an apartment or a small townhouse in a dynamic neighborhood of Reykjavik, combining a target gross rental yield around 6–7% – “the higher the yield, the greater the risk” – and medium-term appreciation potential, with an all-in ticket (acquisition + fees + possible work) of about 500,000 euros. The mission included: market and neighborhood selection, connection with a local network (real estate agent, lawyer, tax advisor), choice of the most suitable structure (direct ownership or Icelandic company) and definition of a time-based diversification plan, integrating legal, tax, rental, and exchange rate risks.
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
