Developers face delays in shared ownership loans in Neskaupstaður, Iceland
Individuals building housing with shared ownership loans have faced increased costs due to a sudden halt in loan allocations. Developers are expressing frustration over delays in disbursing additional funds approved by the Althingi, the national parliament. Completed homes are now awaiting financing under expensive construction loans.
In Neskaupstaður, Nestak has constructed an eleven-unit apartment building tailored for shared ownership loans but is unable to sell the units due to the slow rollout of additional funding promised in June. The Housing and Construction Authority administers these loans, securing 20% equity for the state in each property, thereby facilitating homeownership for first-time buyers. However, funding for shared ownership loans ran out in the spring, putting pressure on developers.
Ari Magnús Benediktsson, the managing director of Nestak, stated, “When we signed the agreement with the Housing Ministry indicating our apartments were approved under the system, they claimed allocations occur twelve times a year. We proceeded to build the housing, but now that it’s finished, interested buyers have no responses, and allocations are not happening. We’ve heard for a long time that money is lacking, and while additional funding was approved in June, there hasn’t been any communication from the Housing Ministry. This is incredibly frustrating, as we have many interested buyers on our list needing shared ownership loans.”
As recently as two months after the allocation of a billion Icelandic krónur for shared ownership loans, the Housing Ministry’s website still states that applications are closed until funds are received from the state treasury. This uncertainty leaves many waiting, and there are concerns that the loans will be depleted quickly. Meanwhile, developers like Nestak are absorbing costs while unable to sell properties, impacting future projects. Finance Minister Sigurður Ingi Jóhannsson indicated that a resolution should be forthcoming in the next few days to ensure equitable distribution of funds throughout the year.