For sale signs go up on Cuban homes

A man looks out from a building in Havana, Cuba, Thursday. Photo / AP

"I almost feel rich!" says Yeni, 26, speaking from her dilapidated two-bedroom apartment in Havana's Vedado district.

Her surroundings are not those of a wealthy woman. The home she shares with a cousin and two aunts was built in the 1940s. It has no hot water and has not been renovated in 70 years - but it is hers. And now she will be able to sell it.

Shortly after the Cuban revolution brought Fidel Castro to power in 1959, all homes effectively became state property. Cubans who remained were given the right to live in the homes they occupied and pass them on to friends or relatives. They were also permitted to swap houses, but selling or buying was prohibited.

All that changed last week, when the Government announced an "amendment" to the property law. What it amounts to is the creation of a legal property market and the most significant loosening of the state's dominance of Cubans' lives since the revolution.

It is part of a process that has been slowly unfolding since 2006, when Castro was forced by illness to hand over the presidency to his brother, Raul, after 47 years in power.

The younger Castro, who turned 80 in June, has emerged as far less dogmatic than Fidel. He vowed, on taking office, to make "structural changes" to the way Cuba was run.

Cubans were permitted to have their own mobile phone contracts and stay in previously off-limits tourist hotels. But in the past 18 months, the scale of the reforms has increased. Last month, in a bid to increase productivity, it was announced private farmers would be allowed to lease up to 67ha of land and cultivate it themselves.

Raul Castro has also vowed to reduce the number of people on the state payroll by 20 per cent and boost self-employment. In two years, more than 300,000 people have moved into private enterprise. Street stalls selling everything from pirate DVDs to kitchen implements have sprung up all over Havana.

"I'm not sure I like Raul Castro," said Yusi, a street hawker selling salsa CDs to tourists on Havana's Malecon. "But maybe I like what he is doing."

Castro is adamant his reforms are designed to preserve Cuba's socialist system - in which free, albeit limited, healthcare and education are provided for the entire population - rather than to dismantle it.

Philip Peters, a Cuba analyst from the Lexington Institute in Arlington, Virginia, says the move on property sales is likely to have deep ramifications: "Overnight, this represents a creation of wealth for thousands of Cuban families."

Until now Cubans wanting to move have used the permuta, or swap, system. It involves finding someone with a property of about equal size and agreeing to swap. Supposedly, no money is involved, but under-the-table payments are usual.

The new, legal market will not be unrestricted. Foreigners, apart from those who have permanently migrated to Cuba, will not be allowed to buy property. The Government is considering a separate scheme to allow foreigners to buy new houses around proposed golf courses.

Cubans will be limited to owning a maximum of two homes each, with one designated a "holiday home".

A stamp duty of 4 per cent will be charged to both the buyer and the seller. The buyer will have to prove that the source of any funds is through legitimate means. Given that the average state income is around US$20 ($25) a month, some may struggle to explain where the money to buy property worth several thousand dollars comes from.

The reality is that most of the money will come from abroad, largely from Cuban relatives in the US. Once branded gusanos, or "worms", by Fidel Castro's Government, Cuban-Americans are increasingly providing a vital source of hard currency for the island. Annually they send around US$1 billion in the form of remittances.

The flow of money and people from the US to Cuba has soared since 2009, when Barack Obama lifted almost all the restrictions on Cuban-Americans who wish to send cash to Cuba or visit the island.

Havana airport's Terminal 2 receives up to six flights a day from Miami alone, and new routes from other US cities are being opened up.

Some Cuban-Americans are even returning to retire. Until now, anyone emigrating permanently forfeited the right to their property, which was seized by the state. The law led to families being split, with one member staying behind, often permanently, as relatives emigrated. Now those leaving will be able to sell their home and keep the proceeds.

These latest reforms have been welcomed as long overdue by Cubans, although some complain they still fail to solve the chronic housing shortage and will provide little benefit to those millions who don't have any property in their own name, or the money to move home.

And it remains to be seen how far the Government will permit an open housing market to develop.

No provision in Cuban law allows for the role of estate agent as a legal occupation. Advertising is largely prohibited.

Nevertheless, it does seem that Raul Castro, once dismissed as little more than an understudy to his brother, is making his mark.

"Raul has shown he is far more comfortable than his brother ever was with a smaller state and more market activity," says Peters. "Cuban socialism is going to look quite different."

Raul the younger
Raul Castro took the reins in Cuba after his elder brother, Fidel, became ill five years ago. In 2008, he was officially elected President when Fidel withdrew permanently from office.

Raul, who is 80, was in charge of the military for 47 years. Last year, away from the shadow of his illustrious brother, he initiated steps freeing up the socialist economy.

Weeks after coming to power in 1959, Fidel Castro said that "behind me come others more radical than me". He was referring to Raul - and his successor's moves could yet lead Cuba in a direction that Fidel would never allow.

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