More information coming in…

The modifications seek to make procedures for the transfer of housing ownership by means of swapping, donation, buying and selling, etc, more flexible and contribute to the volunteer relocation of living spaces among people, Granma newspaper reported.

The norms, published in an extraordinary issue of the Official Gazette on November 2, recognize the buying and selling, swapping, donation and allocation of houses due to divorce, death or emigration of the owner among Cuban nationals living in the island and foreigners with a permanent residence in Cuba.

Granma’s report adds that prior authorization from municipal Housing offices will no be longer required.

The law ratifies that it will only be allowed to own one home as permanent residence and a summer house.

The only requirements established for the transfer of property ownership is the seal of a notary and that the property must be previously registered in a land registration office.

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Interesting. Maybe this is something. Note that Cubans can now own a vacation home… not that many can afford it so I wonder if this the government’s way of letting a Cuban American exile “buy” a house through a family member.

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More from Marc Frank, Reuters article

The easing of restrictions on property ownership is likely to reshape Cuban cities, spur real estate development and speed renovation of Cuba’s picturesque but dilapidated housing stock. It is also expected to reconfigure Cuban conceptions of class as some homeowners cash in their properties and areas of Havana are gentrified.

“I hope the new law gets rid of so much paperwork, bureaucracy and other problems that simply lead to corruption. If you can now move without months and years of effort and paying people off, we will be content,” said Maritza, a 35-year-old food service worker.

Previously, any Cuban who wanted to swap their home for another had to penetrate thick layers of bureaucracy. Houses were also confiscated by the state if a Cuban moved abroad. Now by contrast, the new rules state that the purchase, sale, donation and trading of houses will be recognised even in cases of “divorce, death or permanent departure from the country”.

The measure is the latest and most dramatic signal that the authorities are serious about implementing reforms adopted this year. Last month, the government ended another ban, also dating from 1959, on the sale of cars. State companies have been given more autonomy, state payrolls and subsidies have been trimmed, and retail services liberalised.

Analysts say that home sales could free up capital needed to jump-start small businesses. Cubans living abroad, especially in the United States, who remit some $1bn a year to the island, have proved instrumental in financing and supplying thousands of small businesses since the sector was liberalised last year. They are now expected to invest in housing through their relatives, pumping millions of dollars into the local economy and helping to renovate the crumbling housing stock.

“This change is another example of the failure of ‘big bang’ models to predict the evolution of the Cuban economy,” said Jose Gabilondo, associate professor of law at Florida International University, said. “Changes in the rules of the game are already under way.”

However, the new housing law dashes hopes that the local real estate market might open up to large domestic or foreign investment as it continues to prohibit foreigners from owning property unless they are permanent residents. A special exception is expected in the next few months for golf course and other tourist developments currently under negotiation with various foreign companies.

Every property transaction will require a notary, with payment through a state bank, and both the seller and buyer paying a 4 per cent tax.

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I will continue to post analysis of the Cuban real estate market in the comments section of this article:

Yoani Sanchez writes Cubans Speculate About What the Right to Buy and Sell Homes Will Mean

“One of the principal fears on the street now is concern about how the Central Bank will rule on the legitimacy of money used to buy real estate. Because for every transaction of this type, the cash must first be deposited in an account and the distrustful clients of our banking system fear that it could end up being confiscated if the state decides it didn’t come from “clean” sources.”

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Don’t forget that ALL funds must go through a Cuban bank.

This new law will get tens of millions of dollars deposited into Cuban bank accounts, probably by the end of 2011.

AND, the Cuban government can deny any transaction if the seller will become homeless because of the sale.

So, don’t be fooled into thinking that this is some new “free market” real estate market. As usual, the “market” is controlled by the government.

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Tim Padgett of TIME magazine writes a great summary of the situation. Tim has been TIME’s Latin America bureau chief since 1999.

He writes about why the US should drop the Embargo and why this new real estate law could be a game changer.

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Former USAID official José Cárdenas who oversaw hundreds of millions of dollars in USAID “development assistance” to Cuba and right wing blogger writes from his blog Shadow Government this article Cuba’s smoke and mirror reforms so you know there is a little bias there but I have to admit, he makes several good points.

“Rather than empowering individual Cubans, the regime’s goal in allowing the open trade of houses is to hopefully siphon more Cuban American money into the island’s perennially bankrupt economy. With average Cubans on the island too poor to buy or improve their dilapidated dwellings, their hope is relatives in Miami and elsewhere will remit even more cash to the island attempting to improve their relations’ situation.”

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One could also argue that the Cuban people are actually smart enough to sell their property in order to reinvest the funds into other real estate purchases, development, renovations etc.

One thing people like Jose Cardenas always underestimate is the intelligence of the Cuban people.

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More analysis on the implications of real estate sales in Cuba.

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Andrea Rodriguez and Peter Orsi from Associated Press have a good summary of Cuban real estate for sale.

“The new law requires that Cubans prove the legitimacy of their funds, and does not establish the right of foreigners to purchase property. There also is no mechanism for lending or mortgages, meaning the price must be paid in cash.”

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Don’t forget people… ALL transactions have to go throug a Cuban bank AND the Cuban government has to approve the transaction AND if the seller will be deemed to be homeless after the sale, the government will kill the sale.

So, DO NOT THINK this is a free market move by the Cuban government. This is a money grab for the Cuban government FIRST with the interests of the Cuban people SECOND… maybe even third, third behind the Cuban golf course developers interest.

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Miami real estate attorney Jose Palli comments on the new Cuban real estate market... or coming lack thereof.

He makes good points about how restrictions will hinder any robust transfer of Cuban homes.

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With a longer article featuring more insight by Jose Palli into real estate in Cuba.

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