Each morning before the sun rises too high, Cubans gather at a shaded corner in central Havana, mingling as though at a cocktail party. The icebreaker is always the same: “What are you offering?” This is Cuba’s informal real-estate bazaar, where a chronic housing shortage brings everyone from newlyweds to retirees together to strike deals that often involve thousands of US dollars in under-the-table payments. They are breaking not just the law, but communist doctrine by trading and profiting in property and now their government is about to get in on the action.
Cuban President Raul Castro has pledged to legalize the purchase and sale of homes by the end of the year, which would bring this informal market out of the shadows as part of an economic reform package under which Cuba is already letting residents go into business for themselves in 178 designated activities, as restaurateurs, wedding planners, plumbers, carpenters.
An aboveboard housing market promises multiple benefits for the cash-strapped country: It would help ease a housing crunch, stimulate construction employment and generate badly needed tax revenue. It would attack corruption by officials who accept bribes to sign off on illicit deals and give people options to seek peaceful resolutions to black-market disputes that occasionally erupt into violence.
Photo: Reuters
It also is likely to suck up more hard currency from Cubans abroad who can be counted on to send their families cash to buy, expand and remodel homes, especially since US President Barack Obama relaxed the 50-year-old economic embargo to allow unlimited remittances by Cuban-Americans.
“All these things are tied in,” said Sergio Diaz-Briquets, a US-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.”
Few changes are likely to be as complex and hard to implement as real estate reform.
From the earliest days of the revolution, former Cuban president Fidel Castro railed against exploitative, absentee landlords and enacted a reform that gave property ownership to whoever lived in a home, regardless of who held title. Most who left the island forfeited their properties to the state.
The housing stock, however, already run down before the revolution, continued to deteriorate, the US embargo choked off the supply of building materials and new construction failed to keep pace with demand.
While they wait for the new law to be enacted and the specifics to be announced, Cubans have few legal options. They can enroll in cooperative construction projects, build on existing properties, join the long waiting list for government housing or head to the open-air real-estate market in the hope of negotiating a permuta, which is officially a swap of equal-value properties, but in reality usually involves illegal cash on the side.
Many enlist the services of “runners” like Manuel Valdez, an 83-year-old ex-military man who has been brokering transactions for four decades. At the downtown bazaar, Valdez holds court on a concrete bench, keeping track of real estate offers in a tattered notebook and on posterboard that he tapes to a tree.
Gesturing at the people milling around hoping to strike a deal, Valdez said housing is such a problem that legalization was inevitable: “This is a situation that the state had to get off its back one way or another,” he says.
Some Cubans enter into sham marriages to make deed transfers easier. Others move into homes ostensibly to care for an elderly person living there; they register at the address and, after enough time passes, can legally claim the “inherited” title.
Nowhere is there an official record of money changing hands.
A Havana professional with a job that pays far more than most salaries told of swapping his tiny apartment about 10 years ago for a bigger, historic home whose bathroom and roof were falling apart, and whose occupants, a 60-something couple, could no longer manage.
“It is such a big problem, the housing situation,” said Diaz-Briquets, who estimated in a recent paper that the country of 11 million people was short about 1.6 million units of “adequate housing” last year.
The Cuban government puts the shortfall at closer to 500,000 homes. The result is legions of bickering divorcees trapped under the same roofs; newlyweds forced to bunk up with siblings, cousins, uncles, aunts; old people unable to repair their crumbling homes.
Cuba experts caution that the new measure is just a first step toward solving the housing crisis and note that it deliberately stops short of creating a freewheeling, capitalist real estate market.
Raul Castro has said home ownership will be limited to one per individual to avoid accumulation of wealth. The government has announced plans to extend credit for the purchase of building materials, but specifics are still unknown and no mechanism is in place for home loans. Duties will be levied on both sellers and buyers, and if taxes are too steep it could provide an incentive to underreport transactions.
Only Cubans and permanent residents will be able to buy property, but there is at least a potential for Cubans to front for foreigners keen on owning a waterfront art-deco masterpiece.
“You start down a path of property accumulation and who knows where that’s going to lead,” says Rafael Romeu, a US-based expert on the Cuban economy.
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