Íbúðalánasjóður - Company Announcement

Monthly report August 2014

The HFF Increases the Supply of Rental Housing

The HFF's main function is to provide mortgage loans and protect the assets
entrusted to the Fund. In light of the current shortage of rental housing, the
HFF has decided to address the situation by altering its procedures while
emphasising the framework set for the Fund. 

New procedures increase the supply of rental housing

The HFF has introduced new procedures for managing the Fund's properties in
communities outside the greater Reykjavik area, where turnover in the property
market is limited. In these communities, properties that are listed for sale
and are in good condition will simultaneously be offered up for rent. Demand
for leased or purchased properties dictates the course taken for these HFF
properties. This increases the probability that the ratio between properties
for rent and properties for sale will accurately reflect conditions in the
different communities where HFF properties are located. 

Most HFF properties are already leased out; 75% of appropriated properties go
immediately on the rental market 

The HFF itself leases out 920 properties and 450 others via Klettur Property
Management, adding up to a total of 1,370 rental properties across Iceland. 

Residents of an appropriated property have the option of continuing their
residence as tenants. Thus, three of every four apartments appropriated by the
HFF are immediately leased out to the residents at the time. 

There are currently 983 properties listed for sale with real estate brokers.
With double listings, however, potential rental apartments will increase
considerably. It is to be noted that many of the HFF's vacant properties are in
areas where there is little demand for rental housing or the properties are too
big to be suitable for the rental market. 

Habitable housing does not equal rentable housing

Approximately 140 properties are not undergoing a sales process, as they are
either uninhabitable or in the process of entering the purchase or rental
market. There are stricter requirements for the condition of apartments on the
rental market. Many properties appropriated by the HFF require considerable
renovations before meeting the requirements made to housing on the rental
market. In the last two years, the HFF has attempted to meet the great demand
for rental housing by undertaking extensive renovations of 530 properties
across the country, particularly in the Suðurnes area. 

Extensive housing renovations are not consistent with the role of the HFF

The idea of the HFF undertaking extensive renovations in order to introduce a
property on the rental market is inconsistent with the Fund's role and
authorisations. In addition, the HFF has no sources of income to pay the high
costs of undertaking such extensive renovations. Such undertakings require
additional funding for the HFF. 

The HFF has only a temporary authorisation for leasing operations

The HFF's main function is to provide mortgage loans. After the banking crisis
of 2008, the Fund received temporary authorisation to rent apartments in light
of social circumstances. Said authorisation does not alter the fact that the
HFF's main role is to provide mortgage loans and protect the assets entrusted
to the Fund.

Attachments:

monthly report august 2014.pdf