Vacation Rentals in Iceland

When I first wrote about vacation rentals in Iceland, there were fewer than a hundred on the big listing sites. That's no longer the case. You can now rent a flat in downtown Reykjavik, a summer house with a hot tub near the Golden Circle, or a cottage on a working farm in the north. For groups and families, a rental is still one of the best ways to keep Iceland's costs under control.

Why rent instead of booking a hotel

The big saving is food. Eating out in Iceland is expensive, and a kitchen lets you self-cater. Stock up at the supermarket chains Bónus and Krónan and cook most of your meals, and the savings over a week add up fast. Split between four or six people, a rental often costs less per head than hotel rooms, too.

A rental makes the most sense if you:

• plan to stay in one place and do day trips around the region
• will have a car every day
• are traveling as a family or a group
• would rather cook than eat out

It makes less sense if you're traveling solo, moving on every night, or planning to eat out most evenings. Then a hostel or guesthouse is usually better value.

Where to base yourself

Reykjavik

Apartments in and around the city center are the easiest choice for a first trip, especially in winter. You can walk to restaurants and pools, and many day tours pick up in town, so you don't need a car every day. Parking downtown can be a headache, so ask about it before you book. See accommodation in Reykjavik for other options.

The south

Summer houses and cottages around Selfoss, Hella and the Golden Circle put you within reach of Gullfoss, Geysir and the south coast. Many are built for groups, some have hot tubs, and almost all of them need a car.

The north and west

Akureyri works as a base for Mývatn, Goðafoss and Húsavík. On the Snaefellsnes Peninsula and in the Westfjords, rentals are fewer and book up early for summer. See where to stay in the Westfjords and our review of the Kaldbak-Kot cottages in Húsavík.

Where to find rentals

The big international platforms (Airbnb, Vrbo, Booking.com) list plenty of Iceland's apartments and summer houses. For the countryside, also look at Hey Iceland, an Icelandic network of countryside stays, which lists self-catering cottages and apartments alongside guesthouses and farm stays. Our alternative accommodations page has more ideas.

Make sure the rental is legal

Iceland regulates short-term rentals, and it's worth knowing the rules before you pay. According to Ísland.is, the government portal:

• A private person renting out their home, or one other property they own, needs a homestay registration.
• Homestay rentals are capped at 90 nights and 2,000,000 ISK in income per calendar year.
• Every registered property gets a registration number, and it's needed on all marketing and booking sites.
• Companies, and anyone renting beyond those limits, need an operating licence for accommodation.

So look for the registration or licence number on the listing, and ask the host if it's missing. Unregistered rentals can be fined up to one million ISK per violation. That's the host's problem until the listing is pulled and your booking goes with it.

Things to check before you book

• Road access in winter. A cottage up a gravel track can be hard to reach after snow. Check umferdin.is for conditions, and ask the owner whether the road is cleared.
• The car. Outside Reykjavik, you'll need one, and car rental in Iceland isn't cheap. Add it to the rental price when you compare with a hotel plus tours.
• Fees. Cleaning fees and platform charges can add a lot to a short stay. Compare the total, not the nightly rate.
• Check-in. Many rentals use key boxes and codes. Make sure you have them before you set off, because phone signal is patchy in some valleys.
• Location. If you're booking near Grindavík or the Blue Lagoon, check Safetravel's Reykjanes page first. The area had nine eruptions between December 2023 and August 2025, and the Icelandic Met Office says magma is still building up.

Photo by Patrick Gage