Cuba Authorizes Legal Housing Market

Fernando Ravsberg

For decades, Cuban homeowners were prohibited from selling their properties. Photo: Raquel Perez

HAVANA TIMES, 5 nov. — Cubans can now buy, sell, donate, exchange and adjudicate their homes, according to a decree published in the Gaceta Oficial this week.

The new law states that, “The need to help solve the housing problem in the country makes it advisable to remove prohibitions and facilitate the transfer of ownership of housing for the purpose of ensuring the effective exercise of the rights of homeowners.”

The law specifies that owners can only be Cuban citizens and foreigners with permanent residence in the country.  It also maintains the ban on owning more than two houses, one in the city and one at the beach or in the country.

All sales and swap transactions will be made through bank payments and will be charged at a 4 percent tax.

The houses of Cubans who leave the country will continue to be confiscated by the government, but what’s new about this law is that properties belonging to people who intend to emigrate can now be freely transferred to a member of their family – including spouses, children, grandchildren, parents, siblings, nieces and nephews, and uncles and aunts.

Up until now, such individuals were not recognized as having any rights to these properties.  In this way, citizens who leave the country can now decide to whom they will convey their homes.

Cubans gathered informally in the Paseo del Prado to try to swap their homes. Photo: Raquel Perez

Swapping had been the only way

For decades, homeowners could only change houses or apartments through a complex system of permutas (swaps), which were monitored by the government to ensure that no money was involved.

The purchase and selling of homes is one of the many prohibitions that President Raul Castro promised to eliminate at the beginning of his mandate; other changes include Cubans being allowed to stay in hotels, buy and sell cars, and repair their homes, as well as the rights to purchase cell phones, use the Internet and buy computers.

The previous swapping of homes was a process that could take years.  It was unlikely that families would find a home they desired that was at the same time owned by someone interested in theirs. For this reason, chains of transactions were prepared involving swaps of up to six to seven properties so that each owner would finally receive what they wanted.

The system lent itself to all types of illegalities, the majority of which involved officials from local offices of the Direcciones de la Vivienda (Housing Dept.), the office charged with enforcing the ban on home sales. Therefore, to buy houses, Cubans invented all sorts of stratagems, from marrying the owner to forging the titles to the properties that they would then swap.

The law allows Cubans to sell their homes without having to pay corrupt officials. Photo: Raquel Perez.

The downside: social division

The opening of the sale of housing was a demand that had wide support among Cubans, but the previous government kept this closed for fear of speculation.

There is a huge price difference between the sale values through the government and the black market (the official sale price of a two-room unit could be 300 Euros, while the under-the-table price was between 7,000 and 15,000).

The problem is that the number of homes built by the government was insufficient to meet the country’s demand; therefore people were forced to resort to illegal purchases.  Citizens can now buy homes without committing a crime and, even if they have to pay taxes, they will save the money that was previously handed over to intermediaries and corrupt officials.

However, the measure will also have some long-term adverse effects.  The principal one could be the loss of the current social mix that exists in neighborhoods, where for decades the relatively rich and the poor have lived side by side.

It’s expected that the new law will gradually produce mass relocation, where more resourceful Cubans will buy the biggest houses in the best areas while lower-income families will try to economize and look for housing away from the city center.

Also see: Cuba’s New Property Law Allows Sales