Homelessness is often framed as an unavoidable reality—too big, too complex to solve. But Iceland tells a different story. While the UK’s homelessness crisis has reached record highs, Iceland has come close to eradicating the problem. The difference? An approach that treats housing as a right, not a privilege.
More than 354,000 people across the UK are currently experiencing homelessness, with 126,040 households living in temporary accommodation in England, a record high since 1998. 4,667 people were recorded sleeping rough across England on a single night in Autumn 2024, a 20 per cent increase from the previous year and a staggering 91% rise since 2021.
Meanwhile, in Reykjavik, Iceland’s capital, the number of rough sleepers is significantly lower; only 0.24 per cent of the city’s population experiencing homelessness, according to a 2021 report. Iceland, despite its harsh winters and high cost of living, has one of the lowest homelessness rates in Europe. The country’s approach to housing and social support has helped prevent the crisis that has taken over Britain.
Britain’s rising homelessness crisis is the result of a combination of factors. The cost-of-living crisis has pushed many into financial hardship, with private rents in England rising by 6.2 per cent in 2023 alone. Local councils have struggled to keep up with demand for temporary accommodation, while government welfare cuts have left vulnerable people without a safety net.
According to Shelter, one in 160 people in England are currently homeless, with the crisis reaching a level unseen in decades. The introduction of Universal Credit, with its five-week wait period for payments, has been linked to an increase in evictions and financial insecurity. No-fault evictions, where landlords can remove tenants without reason, have surged by 46 per cent in a year, according to government data. However, the government has pledged to abolish Section 21 ‘no-fault’ evictions as part of its wider homelessness strategy.
Iceland’s approach to housing is fundamentally different. The country operates on a “housing first” model, where permanent housing is prioritised before tackling issues such as addiction, unemployment, or mental health. In the UK, many people experiencing homelessness are placed in temporary accommodation for months or even years, often in poor conditions. Iceland, in contrast, ensures people are housed first before offering long-term support.
The impact of this approach is clear. It is estimated that between 40 and 50 people are living on the streets in Iceland, with an additional 80 to 100 experiencing near homelessness. While homelessness does exist in Iceland, it remains largely invisible, with most affected individuals staying in shelters or transitional housing.
One key factor behind Iceland’s success is its strong social welfare system. The country offers generous unemployment benefits, financial assistance for low-income households, and accessible mental health care. The welfare system is designed to prevent homelessness before it happens, ensuring that people in financial difficulty receive immediate support. In the UK, strict benefit sanctions and delays in payments have been linked to rising homelessness rates
Iceland also benefits from a different housing market structure. Unlike the UK, where private landlords dominate the rental sector, Iceland has a large proportion of cooperative housing associations. These non-profit organisations ensure that rental prices remain stable and that lower-income households have access to secure, long-term housing.
While the UK’s housing market is far larger and more complex than Iceland’s, there are lessons that can be learned. Pilot housing-first projects in the UK have shown promise, but they remain limited in scale. Meanwhile, Iceland’s Housing First model continues to demonstrate success by prioritising permanent housing before addressing other issues such as addiction or unemployment. Expanding these programmes could provide a long-term solution rather than relying on temporary accommodation. Experts have also called for stronger rent controls and an increase in social housing construction to combat rising rents.
The UK government has allocated nearly £1 billion for homelessness prevention and rough sleeping services for the fiscal year 2025/26. This includes £185.6 million for the new Rough Sleeping Prevention and Recovery Grant and £633 million for the Homelessness Prevention Grant. An additional £60 million has been allocated to councils through Winter Pressures Funding to prevent evictions and secure accommodation during the colder months
Some argue that Iceland’s success is due to its small population of just 376,000, making large-scale homelessness less likely. The UK, with 67 million people, faces different challenges. However, evidence suggests that the key to reducing homelessness is not the size of a country, but the political will to prioritise long-term housing solutions.
Homelessness in the UK continues to rise despite government pledges to end rough sleeping by 2024. Charities warn that without urgent policy changes, homelessness will continue to rise, pushing more people onto the streets. Iceland’s model proves that homelessness is not inevitable—it is a problem that can be solved when housing is treated as a basic human right rather than a privilege.
AI tools were used in the production of this article. Le Chat assisted in generating potential story angles and sourcing relevant materials. ChatGPT was used to structure, write, and refine the article. Perplexity AI was utilised for fact-checking. CoPilot was used for image generation. All AI-generated outputs were critically evaluated, fact-checked, and edited by the journalist to ensure accuracy and journalistic integrity.
