New housing policy comes under fire

Public housing association Bústaðir should be ranked alongside private housing providers for projects in the capital, according to the government’s new housing proposal.

A consultation statement from housing minister Elsebeth Mercedis Gunnleygsdóttir grants Bústaðir a DKK 400 million loan authorisation earmarked for housing projects across the country.

But the new package comes with a set of specific terms and conditions.

Higher profit requirements

DKK 200 million must be spent on project of public benefit, such as shared accommodation or student flats.

DKK 100 million is to be spent on properties in areas of the country where there is no competition in the housing market.

Bústaðir will be allowed to spend the remaining DKK 100 million as it wishes, on the proviso that if it is spent on rental properties in Tórshavn, the profit requirements will be increased, i.e. such projects will be put on an equal footing with private housing providers.

"Rental prices will increase"

Commenting on the increased profits provision in the proposal, Andras Róin, CEO of Bústaðir, says that while this may make it easier to attract private investors, it also means that rental costs will go up.

“The political will is that rental prices in Tórshavn should increase even further,” he says. ”My rough estimate is that rental costs will go up by 20 percent.”

The housing minister disagrees: “I firmly believe that by increasing the competition in the housing market, the supply will grow, which will bring the prices down in the long term.”

Translated by prosa.fo