Big Game-Changer in Cuban Real Estate

This past month has been an earth-quake for Cuba/US relations. On November 3rd, Damien Cave published a piece in the New York Times saying “Cuba announced a new property law Thursday that promises to allow citizens and permanent residents to buy and sell real estate — the most significant market-oriented change yet approved by the government of Raúl Castro, and one that will probably reshape Cuba’s cities and conceptions of class”. He refers to it as “the starting gun for an indirect investment race”.  To read the entire article, visit The New York Times

More from the article:

The new rules go into effect on Nov. 10, according to Cuba’s state-run newspaper, and while some of the fine print is still being written, the law published on Thursday amounts to a major break from decades of socialist housing. For the first time since the early days of the revolution, buyers and sellers will be allowed to set home prices and move when they want. Transactions of various kinds, including sales, trades and gifts to relatives by Cubans who are emigrating, will no longer be subject to government approval, the new law says.

Owners will be limited to two homes (a residence and a vacation property) and financing must go through Cuba’s Central Bank, which will charge fees, which have not been determined. And a tax of 8 percent will be split by the buyer and seller.

On one hand, billions of dollars in property assets that have been essentially unvalued or undervalued and locked in place for decades would be available for sale. Some experts say home sales could free up the capital needed to jumpstart the island’s economy. At the very least, they argue, it will probably lead to a boom in renovation.

(Caption from NYT: People looking to exchange apartments look for signs posted in a park in Havana. There are no vacancies in Havana – every dwelling has someone living in it, and since it can take years to find an appropriate swap, most Cubans are essentially stuck where they are)

The boom can possibly exacerbate class conflict, plus the new law does not broach the subject of property confiscated by the government in the early years of the revolution. So get ready for a bumpy ride.

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