A Housing Market, Cuba Style
- Submitted by: manso
- Editorial Articles
- 09 / 17 / 2011
By Overseas Property Mall Created: Sep 15, 2011. I’m standing at a shaded corner in Central Havana, Cuba, with many others, all of us looking as shady as our surroundings. Someone comes up to me asking “what are you offering” to break the ice. Where am I?
You would be forgiven for thinking I am on the run, trying to buy papers to get across the border; but actually, all I am doing is trying to buy a house.
Cuba’s housing shortage has become so dire that thousands of people are forced into these backstreet housing bazaars in the hopes of being able to buy a house that could cost thousands of dollars in under-the-table payments—payments that break both the law and the Soviet doctrine by trading in and profiting from property.
But fear not, the government is unlikely to come crashing in on these parties. Instead, it plans to get a piece of the action. Raul Castro has pledged to legalize the underground housing market by the end of the year, as part of the country’s economic reform package. The reforms have already begun; Cubans have recently been allowed to go into business for themselves in 178 designated occupations including restaurateurs, wedding planners, plumbers, and carpenters.
To legalize the housing market would be one of the biggest steps forward (as in away from communism) that Cuba has taken in the 50 years since the communist revolution swept Fidel Castro to power. With the sale and purchase of property legal, the chronic housing shortage would start to ease, and employment would be stimulated via increasing construction, thereby bringing in much needed tax revenues.
We would also expect to see increasing remittances coming from Cubans living abroad. U.S. President Barack Obama has just relaxed a 50-year embargo allowing unlimited remittances from Cuban-Americans.
“All these things are tied in,” said Sergio Diaz-Briquets, a U.S.-based demography expert. “They want expatriate Cubans to contribute money to the Cuban state, and this is one big incentive for people who want to help their families.”
Aside from the benefits, the housing market is to be one of the most difficult areas of all in which to enact reforms. When Fidel Castro took power he immediately banned all property transactions, and passed ownership of properties on to their inhabitants. The government, preached Castro, would provide housing, food, education, employment, and everything everyone would ever need, and all for little or no money at all—and housing is the area that this grand promise fell shortest.
Housing stock, which was already deteriorating before the revolution, continued to decline. As the U.S. embargo choked off building supplies, existing stock deteriorated quicker, and new construction failed to keep up with demand.
Cuba is a sore country on housing; cyclones and salty air, which can eat through metal bars within a year, have decimated rural shanties and older quarters of Havana. The capital’s seaside Malecon boulevard is a stark example, where once-stately homes collapse after heavy rains on a regular basis, and many of those left standing are propped up by scaffolding and wooden beams—a shadow of their former selves.
A quick walk around Havana will show numerous signs of just how severe the housing shortage has become. While waiting for housing to be legalized, and outside of the illegal bazaars, Cubans are limited in their options to solve their plight.
Raul Castro has said home ownership will be limited to one per individual to avoid accumulation of wealth. Plans have been announced to extend credit to purchase building materials, but there are no mechanisms in place for home loans, and no specifics as to how the loans will work. One thing we do know is that taxes will be levied on sellers and buyers, and if these taxes are too steep we are already looking at underreporting transactions.
However, whatever shape the new laws take, it will almost certainly be better than the current situation, which leaves elderly people in crumbling homes they can’t afford to maintain, and multiple generations of families struggling to live under one roof. Let’s hope so anyway.