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Posted November 03, 2011 by publisher in Business In Cuba

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By PAUL HAVEN | Associated Press

Cuba announced Thursday it will allow real estate to be bought and sold for the first time since the early days of the revolution, the most important reform yet in a series of free-market changes under President Raul Castro.

The law, which takes effect Nov. 10, applies to citizens living in Cuba and permanent residents only, according to a red-letter headline on the front page of Thursday’s Communist Party daily Granma and details published in the government’s Official Gazette.

The law limits Cubans to owning one home in the city and another in the country, an effort to prevent the accumulation of large real estate holdings. It requires that all real estate transactions be made through Cuban bank accounts so that they can be better regulated, and says the transactions will be subject to bank commissions.

Sales will also be subject to an 8 percent tax on the assessed value of the property, paid equally by buyer and seller. In the case where Cubans exchange homes of equal value in a barter agreement, each side will pay 4 percent of the value of their home.

This is a very big step forward…

From Gaceta Oficial

Here is the Cuba real estate law from Gaceta Oficial (thanks to Marc Frank from Reuters for the pdf)

HAGO SABER: Que el Consejo de Estado ha considerado lo siguiente:

POR CUANTO: La Constitución de la República, en su artículo 21, preceptúa la garantía por parte del Estado, de la propiedad personal sobre la vivienda que se posea con justo título de dominio, lo que implica el ejercicio del uso, disfrute y disposición de ese bien.

POR CUANTO: La experiencia alcanzada en la aplicación de la Ley No. 65 “Ley General de la Vivienda”, de 23 de diciembre de 1988 y de otras regulaciones, así como la necesidad de contribuir a la solución del problema habitacional en el país, aconsejan eliminar prohibiciones y flexibilizar limitaciones en los actos de transmisión de la propiedad de la vivienda, a los efectos de garantizar el ejercicio efectivo de los derechos de los propietarios.

POR TANTO: El Consejo de Estado, en el ejercicio de la atribución que le está conferida en el inciso c) del artículo 90 de la Constitución de la República, acuerda dictar el siguiente:

DECRETO-LEY NÚMERO 288
MODIFICATIVO DE LA LEY No. 65,
DE 23 DE DICIEMBRE DE 1988,
“LEY GENERAL DE LA VIVIENDA”

—————————————- Havana Journal Comments—————————————-

Cuba Watch subscribers learned about this news about 30 minutes after the information was released in Cuba.

  1. Follow up post #1 added on November 04, 2011 by publisher with 3905 total posts

    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.

    END

    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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  2. Follow up post #2 added on November 04, 2011 by publisher with 3905 total posts

    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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  3. Follow up post #3 added on November 07, 2011 by publisher with 3905 total posts

    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.”

    END

    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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  4. Follow up post #4 added on November 07, 2011 by publisher with 3905 total posts

    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.



    Cuba consulting services

  5. Follow up post #5 added on November 07, 2011 by publisher with 3905 total posts

    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.”

    END

    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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  6. Follow up post #6 added on November 10, 2011 by publisher with 3905 total posts

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



    Cuba consulting services

  7. Follow up post #7 added on November 10, 2011 by publisher with 3905 total posts

    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.”

    END

    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.



    Cuba consulting services

  8. Follow up post #8 added on November 18, 2011 by publisher with 3905 total posts

    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.



    Cuba consulting services

  9. Follow up post #9 added on November 19, 2011 by publisher with 3905 total posts

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



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