Iceland agency may implement lottery system for shared ownership loans amid high demand

The Housing and Infrastructure Agency in Iceland may need to implement a lottery system for applications related to shared ownership loans aimed at low-income individuals seeking housing. The “first come, first served” principle will no longer apply when the applications reopen for these loans. The agency is preparing to hold a lottery if the demand exceeds the available funds.

Applications for shared ownership loans have been closed since April, awaiting additional funding from the state. The agency’s deputy director noted that if applications exceed the financial resources, prioritization will be needed among applicants.

The government approved an extra billion Icelandic Króna this summer for shared ownership loans to assist low-income first-time buyers. However, the agency has been waiting for the Ministry of Finance to transfer the additional funds. Eleven days have passed since the finance minister indicated a resolution was imminent. Many applicants have lost out on housing opportunities, and contractors have faced increased financing costs, holding unsold properties tailored for these loans.

The deputy director mentioned that approximately 1.5 billion will be allocated when applications reopen, as around half a billion remains unused from prior funding. The allocation will occur in phases due to the unavailability of the program since April.

In cases where applications exceed available funds, prioritization rules will apply. Existing purchase agreements will be prioritized followed by regional considerations, with a quarter of funds earmarked for rural areas. Starting in the new fiscal year, four billion Icelandic Króna is expected to be available annually for shared ownership loans, potentially benefiting 400 homebuyers per year.