FLATS – A BUYER’S GUIDE

How do I buy myself a flat? Don’t panic! The estate agent and mortgage supplier will see to most of the difficult and legal undertakings for you.

1) CREDIT RATING (GREIÐSLUMAT) – The first step in the process of purchasing an apartment is to have a payment evaluation (greiðslumat) done by a bank. This service is not free, and the price can vary greatly between banks. The payment evaluation is a statement drawn up by the bank that determines how much you can potentially afford to spend on a home. To obtain this, you must have the following with you.

• A notarised copy of your last tax return.
• A copy of your pay check stubs for the last 3 months
• Information on all additional income and holdings, i.e. students loans, savings accounts, stocks and bonds
• Information on any other real-estate holdings or items that may be sold or used as collateral
• Payment receipts and information on any loans or debts that are outstanding, including car      loans, credit cards or anything being paid for in monthly payments.

2) START LOOKING - Now you can begin looking through the adverts for houses on sale and wading through the weekly paper called “Fasteignablaðið” (Real Estate Newspaper), circling all the apartments that you like, which fall within your price range. You can then narrow the list down, and phone the respective agent for each flat, requesting a fax, or e-mail with full details, including address, so you can at least have a look at the area in which the property is situated, and even call the owner to arrange a viewing.

3) MAKING AN OFFER (KAUPTILBOÐ) - Talk to the estate agent, and tell them you are interested in the property they are selling, and after discussing how much you think the property is worth, an offer can be made to the owner. This is done via the estate agent, who is for the most part, the middleman. When he receives a reply he will call you back to say whether or not your offer has been accepted. It is important to be aware that if you make an offer it is binding. If the offer has been accepted then both parties are legally bound to keep the terms of sale that are in the offer. If not, you will have to think again and make another offer. While you are making an offer it is the time to discuss the terms of handing over the real estate and what items will accompany the sale. For instance are the window coverings or shelving units part of the purchase or will they cost extra? The general rule is that ovens and fixtures that are nailed down and permanent are part of the purchase agreement, while refrigerators for instance, are not.

4) APPLY FOR A HOUSING LOAN - When the offer is accepted, you will need to apply for a housing loan. This may be done at most major banks or at the “Íbúðalánasjóður” (Mortgage Fund). The íbúðalanasjóður issues loans called ÍLS-lán. These loans are regulated by the fund and may be taken out for 20, 30 or 40 years. When applying, the bank and mortgage fund will need to see the written offer or “kauptilboð” from the Estate agent to show how much the property will cost, and the “Greiðslumat” which you got from your bank, as well as various other documents. Ask your agent about the possibility of supplementary loans (viðbótarlán). Again, this is best done with the help of your estate agent as any incomplete applications will be returned until they are done right, making the whole process take a lot longer than it already does.

5) EVALUATION AND FINALISING THE SALE - Applications are assessed thoroughly to ensure that applicants can cope with the monthly (or quarterly) payments, and still have enough to live on. Assuming that the application has been approved, and the “Íbúðalánasjóður” or bank has given the go-ahead for your mortgage, the estate agent will call you in to sign under the mortgage.

6) PAYMENT – Payments of instalments begins no later than on third ordinary due date after the date of issue if this on the 15th of each month, or on the second ordinary due date if on a quarterly basis. For example if you sign all your papers on the 2nd of January, and you have agreed to make monthly payments you will not have to make your first payment until the 15th of March. Only interest and inflation indexation, and not instalments, are paid on supplementary loans for the first year.

7) CONGRATULATIONS! – You are now a homeowner! The final stage should be delivering all the keys to you. The apartment should be handed over (clean) by noon on the appointed day.

For more information contact the Íbúðalánasjóður. Their web site currently has information in English, Polish, Serbian, Croatian and Danish.

ÍBÚÐALÁNASJÓÐUR
Borgatúni 21
105 Reykjavík
569-6900 - 800 6969
www.ibudalanasjodur.is

PROPERTY FEES

The local municipal authorities collect a property fee that is a tax on property owners. The amount of the property fee is based on the assessed value of the property. The local municipal authorities collect property fees annually and they have some freedom to determine these rates.

The property fees are divided into 5 constituents. These are the rates in Reykjavík for private properties:

• Property Tax - 0.32% of the assessed value of the property
• Land Rent – 0.08% of the assessed value of the property
• Sewer fee – 0.115% of the assessed value of the property
• Water fee – 102 kr. /m2 + kr. 2.637 base fee.
• Waste collection fee – kr. 9.700 per waste bin for weekly pick-up.
• Green bin service – kr. 4.850 per green waste bin. Picked up every two weeks.