Havana El Morro

Varadero News Cuba. The Cuban government announced in Havana today that Cuba has approved a law allowing Cuban people to buy and sell homes for the first time in 50 years, in the latest instalment of President Raul Castro's reforms of the island's Soviet-style economy.

Published Thursday in the Official Gazette, the law applies to Cuban citizens and permanent residents and allows sales, donations and exchanges between private parties.

The reform goes into effect November 10 with the goal of "contributing to the solution of the housing problem" and "guaranteeing the effective exercise of the rights of owners," the law said.

The measure is part of a series of economic reforms aimed at reviving the economy of the communist-ruled island and easing a severe housing shortage.

Castro has begun the process of reorganizing a system in which 85 percent of the country's five million workers are employed by the state.

The expansion of the private sector was the main plank in reform plans endorsed at the Sixth Congress of the Communist Party, in an effort to restructure a Soviet-style economic model and revive a stagnant economy while stopping short of creating a market-led system.

Nearly 80 percent of Cubans own their residences but until now the only transactions available were under a complex system of informal exchanges. At the same time, the country is believed to have a deficit of around a million homes, with the situation made worse by a shortage of building materials and hurricane damage in recent years.

Three years ago, the government acknowledged that its national housing construction and maintenance program was meeting only five to seven percent of the population's needs.

In the absence of authorized home sales, a vast underground economy had grown up in which large sums of money changed hands.

So, for example, a young couple seeking more space would have to pay several thousand dollars off the books to take over a pensioner's four room residence in central Havana.

Under the new system, such a transfer would be a straight commercial transaction with the seller paying the state a four percent sales tax. All homes must now be registered with the government to identify their rightful owners.

In an effort to discourage speculation, the new law allows Cubans to own just one main residence and one secondary home.

A census that is to be conducted next year will provide the government with a truer picture not only of demographic trends but also of the real estate situation in the country.

The new law had been widely expected under the reforms adopted by the party, and comes after a measure allowing the private sale of automobiles in early October.

A separate law allowing Cubans greater freedom to travel abroad is expected to be enacted before the end of the year.

Under the new reforms, the number of private business operators has hit more than 333,000, above the expectations of the authorities, from 148,000 in 2010.

Last year, Castro's government vastly expanded the number of sectors where private enterprises can operate, with 181 professions now open.
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