Iceland Wants Foreigners to Stop Buying Its Land

(Bloomberg) -- A little over a century ago, a young woman named Sigridur Tomasdottir threatened to throw herself into the icy gorge of Iceland’s iconic Gullfoss waterfall in a bid to stop English businessmen from turning it into a hydroelectric dam.

In the end, the proto eco-warrior was able to hold on to her life -- the leasing contract was canceled, allegedly because the money failed to turn up on time -- and the Golden Falls are today one of the country’s biggest tourist attractions.

Iceland Wants Foreigners to Stop Buying Its Land

Iceland’s first environmentalist prime minister, Katrin Jakobsdottir, has now picked up Tomasdottir’s baton by railing against foreign investors who have been purchasing vast swathes of the north Atlantic island’s pristine wilderness.

The 42-year-old prime minister, who heads the Left-Green Movement, wants "further restrictions" on land ownership, but says she will first wait for studies currently being carried out at four different ministries. Their conclusions are expected by the end of the summer.

Iceland Wants Foreigners to Stop Buying Its Land

"First and foremost I want to defend the nation’s sovereignty," Jakobsdottir said in a telephone interview in Reykjavik. "It matters to us that we can decide how the land is developed and utilized."

As a member of the European Economic Area (a free trade zone linked with the European Union), the government has limited space for maneuver. Jakobsdottir says she’s seeking "restrictions based on the size and number" of plots owned. Iceland can already bloc purchases by non-Europeans, as it did in 2012, when it prevented Chinese billionaire Huang Nubo from snapping up a 300-square kilometer piece of land in the north.

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Her government is responding to growing complaints from farmers, many of whom resent the superior purchasing power of foreigner buyers and also question their motives. Iceland only achieved full independence from Denmark in 1944, and patriotic feelings continue to run high. Jakobsdottir’s ruling coalition is reliant on the support of the conservative Independence Party and the Progressives, the party of choice for farmers.

British billionaire Sir Jim Ratcliffe and his associates own a total of 39 plots rich in fishing rivers, according to Icelandic newspaper Morgunbladid, while Sweden’s John Harald Orneberg and Switzerland’s Rudolf Lamprecht are two other fishing enthusiasts with deep pockets who have bought land on the north Atlantic island, according to local media reports.

Ratcliffe has said his main interest is in the local salmon population and that any tightening of the rules may prompt him to reconsider his future plans. "No one wants to be operating against the will of the authorities in a country," said his spokesman in Iceland, Gisli Asgeirsson.

Iceland Wants Foreigners to Stop Buying Its Land

One of Ratcliffe’s Icelandic neighbors, a farmer named Aevar Rafn Marinosson, remains unconvinced.

"They say they want to protect the salmon, but that’s not a very believable explanation," he said. "You don‘t need to own land to protect the salmon."

Though much of it is inhospitable, Iceland’s land is still cheap (prices range from around $500,000 to $5 million, depending on their size and the kind of resources they offer, and can get way higher if the plot hosts a famous tourist attraction). Aevar Dungal, a real estate agent based in the East Fjords, says that while 70 percent of his clients are Icelandic, foreign investors are snapping up the biggest and most expensive plots.

Jakobsdottir insists this is not about "banning foreigners," but rather about "the concentration of ownership" (in Scotland, for example, less than 500 people reportedly own half of all private land) and about ensuring the land is put to its best use.

"I think general regulations that apply to both foreigners and Icelanders are likely to be more successful and more viable," she said.

Iceland Wants Foreigners to Stop Buying Its Land

Sigurjon Sighvatsson, an Icelandic Hollywood producer who has been buying land for the past 20 years, says he doesn’t want to see rules that discriminate against non-residents.

"I’m not afraid of foreigners, I’m more afraid of Icelanders," he said. "Many foreigners who’ve come here were ahead of their time when it comes to protecting the land."

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