Iceland’s government looks to have a final say in big property deals

The proposal is the latest in a series looking to limit major land purchases, especially by foreign buyers.

Iceland’s prime minister is expected later this week to introduce legislation that would place final decision-making authority for large land purchases in the hands of members of the cabinet, as part of near decade-long effort to adopt measures to prevent land from being concentrated in the hands of a limited number of owners.

The bill, aired last week by the prime minister, Katrín Jakobsdóttir, during a meeting of her Vinstri grænir party, would prevent European individuals or companies from making deals that would place large amounts of land in the hands of a single owning entity.

An outright ban on purchases by non-Europeans was passed in 2012 and was used to quash what, to date, has been the highest-profile property deal in Iceland: the planned purchase of a 75,000-acre (300-square-kilometer) expanse of land in the northeastern part of the country by Huang Nubo, a Chinese eccentric with ties to that country’s Communist party.

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The same property later wound up in the hands of a James Ratcliffe, an energy company executive who is one of Britain’s richest citizens. A passionate angler, Ratcliffe has maintained that he has bought the land in order to protect it from development and prevent salmon rivers from being overfished. However, he has since expanded the amount of land he owns, and some Icelanders bristle at a vast area of their country being in foreign hands.

In addition to requiring that purchases of large tracts of land be approved by a member of the cabinet, major landowners will also be required to seek approval before making additional purchases.

A measure to prevent large tracts of land from winding up under foreign control has been in the works since 2018, when four government ministries looked into ways to revise a scuppered 2013 law that barred foreign land ownership so that it did not come into conflict with EU regulations, which Iceland has agreed to in exchange for access to European markets.

“There are of course ginormous interests at stake. Both when it comes to resource utilisation, food security, and also the interests of national sovereignty,” Jakobsdóttir said, according to RÚV, a broadcaster.

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The government already has the power to step in to stop property deals or land development, if it could spoil conservation efforts. Jakobsdóttir said polls suggest a large majority of the population are in favor of expanding this power to prevent land from ending up in a limited number of hands.

After it was determined that European ownership could most likely not be banned outright, government officials later suggested that regulations based on criteria such as land use and the impact of ownership would be more feasible, and indeed preferable, since it could be used to prevent companies headquartered in Iceland from acquiring land on behalf of a foreign buyer.

In a 2018 interview with Bloomberg, Jakobsdóttir underscored that Iceland was seeking to avoid regulations whose sole purpose was to make foreign land ownership illegal.

“I think general regulations that apply to both foreigners and Icelanders are likely to be more successful and more viable,” she told Bloomberg.