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State Aid

PR(08)34: The EFTA Surveillance Authority opens new chapters in the state aid investigation on the Icelandic Housing Financing Fund (HFF)


The EFTA Surveillance Authority decided today to continue its investigation concerning different forms of financial support from the Icelandic state to the national housing agency, the Housing Financing Fund (is. Íbúðalánasjóður). This investigation has been opened following the EFTA Court’s judgment in 2006 requiring the Authority to do so.

Following a review of the HFF scheme on the basis of the EFTA Court’s ruling, the Authority has come to the preliminary view that the aid measures are not compatible with the EEA-agreement. A crucial element of the current investigation is whether the conditions for the lending services through general loans serve a sufficiently restrictive social objective. However, it would not be for the Authority to prescribe a new system for the Icelandic authorities, but for them to introduce more limited conditions for obtaining general loans and design a modified system whereby it is ensured that normal market-based housing loans will not benefit from state aid.

The HFF is an independent state-owned institution. Its tasks comprise granting loans to individuals for construction and purchase of own residential housing as well as granting loans to municipalities, companies and associations for construction or purchase of rental housing. Since its creation in the 1950s, the agency has benefited from different forms of state support such as for example an open-ended state guarantee, tax reliefs and direct contributions from the state budget.

Some of these state support measures were put in place before the date of entry into force of the EEA Agreement in Iceland on 1 January 1994 and have not undergone any substantial changes since then. The Authority has, for procedural reasons, decided to close the formal investigation procedure initiated in 2006, and to continue the investigation under a different procedure (the so-called “existing aid procedure”).

In addition, the Authority has decided to open a separate case regarding potential new aid measure in the form of relief of the HFF from the payment of a state guarantee fee.

The Authority calls on all interested parties to submit comments concerning this measure within one month from the publication of this decision in the Official Journal of the EC and the EEA Supplement.

Today’s decisions are taken independently of the measures related to the real estate market presented by the Icelandic Government last week.


For further information, please contact:

Mr. Amund Utne
Director, Competition and State Aid Directorate
tel. (+32)(0)2 286 18 50


27 June 2008

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