We chose this hotel, despite some bad reviews, partly because it was cheap but mainly because it was close to some friends we were visiting. The biggest disappointment on arrival was the bed linen, which was clean but tatty and unsightly. We borrowed replacements from our friends but later found more acceptable duvet covers in a cupboard in the kitchen. If you want a cheap place to stay in Reykjavik, bring your own linen. Even if you buy replacement linen in Reykjavik, it will still be cheaper than most other hotels.
The "guest house" is not actually a proper guest house. It's a large family house with a small number of separate bedrooms plus two (I think) other bedrooms en suite. The owner is happy for the guests to use it as a home from home. Unfortunately, this means there is no-one on site for registration and to help with problems. The owner seems to use regular guests to help with some administration but there is no welcome pack or instructions on how to find help. The electricity went off one evening and nobody knew what to do.
This lack of basic service is a pity because it spoiled what was otherwise a pleasant stay. A little bit of effort by the owner to provide a welcoming service to guests, with information and facilities to resolve problems, would make a huge difference to customer satisfaction. Even if a little extra were added to the price to cover this, it would still be the best accommodation bargain in Reykjavik.