The regulations have changed in November 2015, in response to the rapid increase in tourism. Essentially, if you're hiking in the Central Highlands with a tent on your back, you're OK. When you're driving the ring-road with a campervan, you're not. You cannot wild camp in a tent trailer, tent camper, caravan, camper van etc.!
From Umhverfisstofnun (emphasis theirs):
It is now illegal to spend the night in tent trailers, tent campers, caravans, camper vans or similar outside organised campsites or urban areas unless the land owner or rightholder has given their permission. Otherwise, the law lays down the following rules for camping:
Where may I camp?
- Along public routes in inhabited areas, you may pitch a traditional camping tent for one night on uncultivated land, provided there is no campsite in the immediate vicinity and the land owner has not restricted or prohibited access, passage or stay within the area by means of signs on gates and walking paths.
- Along public routes in uninhabited areas, you may pitch a traditional camping tent on privately owned land or national land.
- Away from public routes, you may pitch a traditional camping tent, either on privately owned or national land, unless otherwise indicated in special rules which may be applicable to the land area in question.
