This study investigates the institutional learning from attempts at securing affordable housing inclusion within Transit-Oriented Developments (TOD) through institutional change in Reykjavík, Iceland. As Reykjavík embarks on the ambitious City Line project, a bus-rapid transit network aimed at sustainably shaping urban growth, ensuring affordable housing near transit stations has become critical. Past attempts to achieve housing affordability have fallen short since Reykjavík still, to this day, experiences a great lack of affordable housing. Thus, this research employs an institutional learning framework to explore the barriers to and opportunities for ensuring affordable housing in TODs. Through expert interviews and document analysis, the study’s findings highlight the institutional challenges hindering the realisation of affordable housing goals within TODs. These include the vagueness of upper-level policies and terminology, the influence of land ownership, and implementation gaps in planning. Additionally, the research identifies opportunities for institutional change, such as strengthening standardisation from state-level policies, including principles of transit-accessible development in the extensions and re-evaluation of the City Line network, and addressing issues of timescale alignment between the implementation of TODs and the City Line. The study contributes to the limited Icelandic literature on institutional analysis in urban planning and offers ideas for enhancing social inclusivity and housing accessibility for Reykjavík’s future transit communities.