Cuba lifts ban on trade in property

November 3, 2011 7:30 pm

Cuba lifts ban on trade in property
By Marc Frank in Havana

Cuba has formally lifted a five-decade ban on residents buying and
selling property as the communist government of President Raúl Castro
makes its most significant move yet to liberalise the island's
Soviet-era economy.

For the first time since the 1959 revolution, Cubans will be able to
sell property to other Cuban residents without government approval. The
changes, already approved by the National Assembly in August but now
formalised, come into effect on November 10.

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.

http://www.ft.com/intl/cms/s/0/517383b0-064b-11e1-a079-00144feabdc0.html#axzz1d3WYf5on