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I've read here that "in Iceland you are allowed to do this by law as long as you stay away from houses and use common sense like you say". Wild camping in Iceland is one of my ideas for the next summer. The question is what does it means "stay away from houses"? And what should be understand as "common sense"? For instance, if I rent a car to move along the island, may I stop at the side of the route with the car and camp? Of course, I'm not talking about the Ring Road. I'm thinking in secondary trails.

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Is hiking along the ring road permitted? I am planning on a complete circumnavigation this summer and the ring road might be the only road available. Obviously not good to be walking along it when it is a busy freeway, but once away from the metro areas it should, be OK? Does anyone know? –  user3663 Dec 1 '12 at 18:27
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@Tom - Welcome to Travel.SE. you posted your question as an answer to this question. I've converted it to a comment for now, but it's still misplaced - you'll want to click the 'Ask Question' button at the top right of the page, and then more experts will be likely to see your question and try to answer it :) –  Mark Mayo Dec 1 '12 at 18:46

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The "Visit Iceland" website has a page about your rights to camp in Iceland.

Camping with no more than three tents is allowed on uncultivated ground for a single night, unless the landowner has posted a notice to the contrary. However, campers should always use designated campsites where they do exist. Do not camp close to farms without permission. If a group of more than three tents is involved, these campers must seek permission from the landowner before setting up camp outside marked campsite areas.

So, if there is no sign, and the land isn't being used to grow things, you have the right to camp there for one night. That is pretty much all the law says.

So, yes you can camp at the side of the road, IF there is a place to park your car. You should not park your car on the land.

Do not drive off the road or track. Motor vehicles can leave marks that last for generations. Driving off roads or tracks is against the law except when the ground is frozen and covered in snow. See further information under “Practical Information/Driving in Iceland”.

Staying away from houses is just a basic courtesy. The best rule of thumb to follow in my experience is to never be close enough that you can see anything in the windows, and definitely stay away from gardens and obviously enclosed personal space. 300 meters at the minimum.

Sources:

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Here's the same page in English: uk.visiticeland.com/TravelGuide/Rightsandobligations –  Jonik Dec 14 '11 at 19:54
    
Nice, I was looking under the "accomodation -> camping" pages for some reason. –  victoriah Dec 14 '11 at 19:58

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