Cuba announced that, as of November 10th, a new property law will go into effect that allows citizens and permanent residents to buy and sell real estate. In the past Cuba has operated under a socialist housing system, so this will mark a very historic change in housing transactions. It has been a long time since the buyers and sellers of Cuba were free to set the price of their home and move whenever they wanted to. Some are even hopeful that this will lead to more changes towards capitalism in Cuba; however, some are not as optimistic.
Cuban officials have voiced concerns that some of the provisions in the new law will still keep these transactions under the government’s control. Two major areas of concern are that the owner may only obtain two homes and the financing must go through Cuba’s Central Bank. In addition, the bank will charge fees, and the buyer and seller will be responsible for an 8% tax. People are concerned that “the law will probably open a Pandora’s box of benefits and risks.”
Another concern about the new law deals with class conflicts. With this new property law the wealthy will be able to move to better areas, therefore creating a “huge rearrangement” of cities class structure. In addition, homelessness may rise due the titleholder’s ability under the new law to freely sell even if a tenant does not want to move. Many Cubans fear that they may end up on the street.
It is not clear yet how the law will affect foreign purchasers of property, but there are reasons to believe that vacation and summer destinations may have fewer restrictions than other areas of Cuba. There has also been speculation as to how Cuban-Americans will get involved in these types of transactions. Many believe that Cuban-Americans will be eager to provide financing to their Cuban relatives in order to purchase a home under the new law. Now all Cuba can do is wait and see how the new law impacts their country.
How do you think this new law will affect Cuba’s economy? Do you think many Cuban-Americans will help their Cuban relatives purchase properties? Do you think the government will still ultimately have control of the housing market?
Source: The New York Times