Planning and Building

Building and Environmental Regulations In Iceland

The process of constructing in Iceland has been streamlined through the years with the aim of making the process expedient and more efficient. Iceland has implemented the European Union directive on Environmental Impact Assessment so the procedure is mainly harmonized.

Companies can apply for building permits concurrently with the zoning and EIA process. The following link indicates the time it takes for various inspections and permits when applying for building permits. Note that this is not a timeline.


Areas under consideration for development in Iceland need to go through a zoning process that consists of two levels, general and detailed zoning.

General Zoning

It is the responsibility of all municipalities in Iceland to create a general zoning plan for all relevant areas under its domain. The general zoning plan is usually drawn up with consideration for future development, however it is flexible and subject to change. As a strategic plan the general zoning plan details which areas are designated for residential, commercial and industrial development.

General Zoning Process

Step 1  The municipality decides to initiate a general zoning proposal.

Step 2  A zoning commission, established by the municipality, draws up a proposal with their emphases on matters such as environmental impact.

Step 3 The municipality seeks comments from the National Planning Agency (NPA) among others before publishing it.

Step 4 The municipality calls a meeting open to all stakeholders where proposal is presented.

Step 5 The municipality formally agrees on the proposal and Environmental Impact Assessment (EIA) and submits their proposal to the NPA for review.

Step 6 If NPA does not comment on proposal within 4 weeks it will be advertised unchanged.

Steps 1 to 6 are implemented in 4 weeks

Step 7 The municipality advertises the proposal and is subject to comments from all stakeholders. The term stakeholder is classified as anyone who considers him or herself to have interest in the matter.

Step 7 takes 6 weeks

Step 8 The municipality discusses any comments presented to them from stakeholders and makes changes if they are applicable

Step 9 The municipality sends a final proposal for general zoning to the NPA for review. 

Steps 8 and 9 week take up to 12 weeks

Step 10  The NPA has 4 weeks to confirm the general zoning plan and have it notarized.

The General Zoning process takes up to 26 weeks


Detailed zoning

A detailed zoning plan, as the name signifies, is a more detailed implementation of a general zoning plan that is in place.  A detailed zoning plan introduces the terms for development on specific plots and areas within the general zoning plan such as usage, housing types, boundaries, etc. A detailed zoning plan can be developed and implemented at the same time as a general zoning plan.


Detailed Zoning Process

Step 1 The municipality agrees that a detailed zoning plan should be initiated.

Step 2 The description of a development project is submitted, the municipality sends a description to the NPA, among others, for review and then proceeds to introduce the project to the public.

Step 3 The development plan and EIA are presented to all stakeholders at a pre-arranged meeting.

Step 4 The municipality agrees to advertise the development plan and EIA. The advertisement must be in circulation for 6 weeks.

Steps 1 to 4 take 6 weeks

Step 5 The Municipality reviews the received comments from stakeholders and makes necessary changes to development plan if applicable. The term stakeholder is classified as anyone who considers him or herself to have interest in the matter.

Step 6 If no comments are submitted, the municipality can than submit its proposal to the NPA for review unless the plan is subject to an EIA under the law.

Step 7 The municipality has 8 weeks to submit a detailed zoning plan to the NPA after it receives comments.

Steps 5 to 7 take 8 weeks at the most

Step 8 The NPA has 3 weeks to give its assessment from the time that it receives the detailed planning proposal from the municipality. If no comments are received than municipality has year to publish the detailed zoning plan before it becomes obsolete.

The detailed zoning process takes a minimum of 17 weeks


Environmental Impact Assessments (EIA)

Under Icelandic Law no. 26. 2006, an Environmental Impact Assessment (EIA) must be made during the zoning process of all territories in Iceland

The law operates under two annexes.

  • 1 stipulating projects that are subject to an EIA
  • 2 stipulating projects that are subject to an assessment as to whether an EIA is necessary.

An EIA will be initiated as part of the zoning process, but can also be subject to EIA for the project itself depending on the scope of the project. The EIA for a specific project can be assessed concurrently with the zoning process.

The NPA in all cases will rule on whether a project falls under Annex 1 or 2

The diagram below explains the process of Annex 1 and 2 under Law no. 26. 2006




Construction Permit/Development Permit

Companies can apply for Construction/Development Permits from a planning authority within a given municipality.

These types of applications are for major development projects and if necessary can be applied for while a general or detailed zoning process is ongoing.

Following is the Construction/Development process:

Step 1 Application for Construction permit submitted.

Step 2 Planning commission reviews application, and considers the following:

a.      Application is in line with current Detailed zoning plans

b.      Application call for change is zoning plans.

c.       Application is for an area which has no detailed zoning plan

d.      Application is for an area, which has non-general zoning plan.

Step 3        If a: Then planning commission grants construction permit pending affirmation from Municipality.

If b, c or d: Then municipality advertises new Detailed Zoning plan and after 6 weeks grants construction permit pending affirmation from Municipality

Step 4  Municipality affirms Planning Commission ruling

Step 5  Planning Authority authorizes construction permit

Step 6 Construction can begin.

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