Laws Against Selling Property Fail to Cool the Hot Havana Housing Market
- Jan 29, 2008
Havana–Cuba’s capital city is controlled by the socialist state–but that hasn’t kept its residents from buying and selling property using an active underground sales system, the New York Times reports.In Cuba, selling property is illegal. However, the underground housing market twists the island’s condoned practice of trading apartments and homes by infusing illegitimate agents, price speculators and real estate scams that range from backing out of a deal but keeping the cash involved to selling a rundown property billed as a luxury home. And because Cuba, despite new government construction, has a housing shortage, deals can be $50,000–or more.The government tracks straight trades, which are legal, to keep track of its citizens. The sell-and-swap practice, called permuta, involves trading; however, the buyer or seller also provides cash to make up the difference between the two properties’ value. If a large house was traded for a small apartment, for example, the apartment owner would pay the owner of the house a pre-determined amount to offset the home’s higher worth. Residents come every Saturday to trade properties in public–with police watching–in Havana. Signs advertise a unit’s number of bedrooms, garages and other amenities. Even though the government must approve all trades, bureaucrats can be paid off to look the other way in deals that involve unequal properties, the Times says.Illegal property sales also provide some Cubans with another residence option: The U.S. Many of the residents who flee Cuba sell their properties for quick cash and move into lesser accommodations before leaving. The money helps fund their voyage off the island–which the Times calls the Cuban version of a home equity loan.