A First Step

On Thursday November 10 Decree-Law 288 on the legalization of the sale of homes took effect. Complemented with six ministerial resolutions, the decree significantly changes the legislation in effect in this area since the 60’s of last century.

With the new provisions Cubans, formal owners of property, become actual owners. Now they can not only exchange, but also donate, assign or sell their home to other Cubans living in Cuba, to those with residence abroad or to foreigners permanently residing in the country. To make use of this right requires that the property be registered at the Land Registry, along with a statement on the legality of the funds involved, and payment of a tax of 4% per transaction. The price of the property is as stated by the parties, provided that it is not less than the discounted value of the same. And the transactions will be conducted in Cuban pesos through the National Bank.

Now homes owned by Cubans who leave the country permanently will continue to be confiscated but the State will transfer the property to the co-owners or family members up to the fourth degree of consanguinity, for free. That is spouses, children, parents, grandparents, siblings, nephews, uncles and cousins, or persons who, with the owner’s consent, have resided for five or more years in the building.

An assessment of the scope of the new Decree-Law requires that we look at its background.

For years, the population growth, the aging of the housing stock, its deterioration because of lack of maintenance, increasing collapses of existing buildings and the slow pace of construction, formed a tricky situation. The Cuban model is more useful for distribution than productions, and involved itself in resolving the problems while circumventing the participation of citizens.

To that end a “battle for housing” began which ended in complete failure. From 1960 to 1970 they tried to produce 32,000 apartments a year, but the average did not exceed 11,000. From 1970 to 1980 there was a plan for 38,000, but they barely reached 17,000. In the decade of 1980s, the plan amounted to 100,000 homes a year, but the average did not exceed 40,000. Only in the 1990s, did it surpass 40,000, but then it declined. In September 2005, the Secretary of the Executive Committee of the Council of Ministers announced another plan of 100,000 new homes per year, which also failed.

When the housing shortage created a frenzy of occupations and illegal construction, the government turned the focus from plans for construction to controlling the widespread disorder. The Law No. 48-Housing Act, enacted in December 1984, authorized the transfer of ownership to onerous “usufruct” and legitimate occupants, and allowed the legalization of homes that had been built outside the law. This measure gave formal ownership to about 750 thousand families, but its scope was limited to legalizing existing arrangements and putting an end to the lack of control. Illegalities, however, continued their march.

Four years later, in December 1988, a new Housing Act was promulgated. In one of its paragraphs it made that the personal property of the house was understood as the right of enjoyment thereof by the owner and his family, but could not become a mechanism of enrichment or exploitation. That is, the owners were forbidden to sell their property. This law could not prevent black market sales and construction.

In July 2000 Decree-Law 211 was issued authorizing physical inspections of buildings, requiring institutional approval for housing swaps, and giving state officials the right to determine the legitimacy of the property, undermining the rights recognized in the General Law 1988. In the same direction, in February 2001, new Decree-Law was adopted that effectively eliminated the sale between private parties and awarded and Municipal Housing Authorities the right of confiscation. So the box was closed.

The recent provision recognizing the right of the owner and removing the prior authorization of the Housing Authorities, is a recognition of the absurdity of the above laws. Its limitation is that it is directed to the sphere of circulation: property can change hands, but one cannot build new homes. If one of the objectives of the recent legislation is “to contribute to solving the housing problem,” then the right to property must be complemented by measures aimed at building and repair.

According to official figures in 2010 there was a national deficit of about 600,000 homes, more than half of the existing homes were in poor condition, and 85% were in need of repair. However, the reality is that the figures are higher.

Between 2001 and 2005 four hurricanes: Michelle (2001), Charley and Ivan (2004) and Dennis (2005) caused severe damage to housing. Then, in 2008, about half a million homes were damaged or completely demolished by the atmospheric phenomena of Fay, Hannah, Gustav and Ike. Given the failures of the construction plans, population growth and constant collapse of existing buildings, a conservative estimate shows a deficit of about one million homes in a population of more than 11 million. As the current population growth demands an annual 50,000 new houses, it would take several decades building a 100,000 homes a year to solve the critical housing problem.

The solution of the problem demands that citizens participate in parallel with the State, along with the creation of small and medium enterprises — private or cooperatives — for construction materials, repair, sale of materials, transport and alternative financing. It also requires multidisciplinary studies. In short, the joint participation of State and Society.

In this problem, Decree-Law 288 is only the first step. Important because it will generate a change in attitude among Cubans and because it is recognition, so far denied, of the right of ownership. Of course, this is only a first step.

November 15 2011

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