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Since 1942, when the construction of the first apartment blocks at Hringbraut was started, the City of Reykjavík has worked systematically to increase the number of social rental housing in Reykjavík.

In 1997, the city authorities decided to establish a special company, Félagsbústaðir, to oversee the construction and operation of social rental housing. Upon establishment, Félagsbústaðir took over 828 rental apartments. Since then, the number of apartments has steadily increased. At the end of 2019, Félagsbústaðir rented out about 2,800 apartments. The development and increase of housing take into account the City of Reykjavík’s housing plan and the emphasis placed by the city authorities on this issue. 

The City of Reykjavík’s housing plan places emphasis on ensuring social diversity and variety within the city’s districts, and thus it is assumed that 5% of all residential housing is social rented housing.  In accordance with this policy, Félagsbústaðir emphasises that the location of rental apartments is evenly distributed throughout Reykjavík.  Diversity in the composition of the population has many positive effects on the lives of individuals and enriches society. 

According to Act No. 40/1991 on Municipal Social Services, local authorities shall, as far as possible and as necessary, ensure the availability of rental housing, hire-purchase housing and/or social rental housing for those families and individuals who are not otherwise able to provide for themselves due to low wages, a heavy financial burden or other social circumstances.

Félagsbústaðir works closely with the Reykjavík City Welfare Department, which is responsible for evaluating applications for social rental housing and allocating the apartments that are available at any given time. Once the allocation has taken place, Félagsbústaðir takes over the traditional role of landlord.

Social rental housing refers to general social rental housing, housing for the disabled, housing for the homeless with high and complex service needs and service apartments for the elderly. There has always been a strong emphasis on making the rental price of Félagsbústaðir apartments affordable for tenants.