Opposite the small, paved, open square of Lækjartorg is the small park containing Stjórnarráðshúsið (the Government House), built between 1765 and 1770. It was originally constructed as a prison, and the inmates were put to work making wool – the vision of the ideological reformist Governor of Iceland, Skúli Magnússon (Iceland was then under Danish rule). However, the later Governor E. C. L. Moltke decided in 1816 that the building should be his home and offices, and he moved in during 1819.
Iceland was given its own constitution by Denmark in 1874, and successive Governors lived at Stjórnarráðshúsið until 1904, when Iceland was granted home rule. This announcement was read publicly on front steps of the building and the official flag of the country was hoisted in front of it for the first time. From then, the house was occupied by Hannes Hafstein, the Minister for Iceland and the leader of the newly-devolved Icelandic government. A statue of Hannes was built on the lawn in 1931 by Einar Jónsson; the other statue (also by Einar) is of King Christian IX of Denmark, who gave the Icelanders their constitution.
Iceland was given total legislative autonomy in 1918, and became an independent country in 1944, whereupon Stjórnarráðshúsið was given a new function as the offices of the President of Iceland. These were Sveinn Björnsson (two terms from 1944 to his death in 1952), Ásgeir Ásgeirsson (four terms from 1952 to his retirement in 1968), Kristján Eldjárn (three terms from 1968 to his retirement in 1980) and Vigdís Finnbogadóttir, the first democratically-elected female president in the world (four terms from 1980 to her retirement in 1996). She was succeeded by Ólafur Ragnar Grímsson (five terms from 1996 to his retirement in 2016), who had been a longstanding political opponent of the conservative Prime Minster Davíð Oddsson. Davíð decided to move himself and his government into the building, requiring the President to move his offices to Staðastaður a few hundred metres to the south. There was, however, a curious moment of ironic justice: no sitting President has ever lost an election in Iceland, whereas Davíð – the man who threw the President out of Stjórnarráðshúsið – was defeated in the presidential election of 2016.
Beyond the small park is a larger green space called Arnarhóll, a small hill topped by a statue of Ingólfur Arnarson, the founder of Reykjavík. Walk across Lækjargata and into Austurstræti and then take the next left into Pósthússtræti.