Bright, well-maintained rooms at this cheerful yellow-and-white villa are in a good central location, and the prices are reasonable. There is a second building, Gula Villan II, and both locations have guest kitchens and serve breakfast (2000kr). BYO sleeping bag to reduce the price.
They also have a second property, Gula Villan II (same rates), at Þingvallastræti 14.