The ghost of Cuba's Urban Reform: Are we going to repeat Fidel Castro's disasters in Spain?

When Fidel Castro enacted the First Urban Reform Law in Cuba in 1960, the revolutionary government presented it as a heroic act. The measure effectively halved rents overnight, claiming it was a matter of social justice for working families.

However, what initially seemed like a victory for tenants ultimately marked the beginning of an ongoing housing tragedy.

In Spain, some tenant movements and unions are demanding a 50% reduction in rents, and one must wonder: how is it possible that, with Cuba's clear precedent, this populist solution is still considered viable?

In Cuba, the First Urban Reform Law not only halved rents but also marked the beginning of a massive expropriation process.

Real estate properties were seized from their rightful owners and transferred to state control.

This act, presented as a strike against "speculators" and "rich exploiters," stripped thousands of families of their property and effectively eliminated the real estate market.

Without the ability to legally sell or acquire homes, Cuba's housing economy has come to a standstill.

The expropriated homes, which previously generated income for their owners and housed families in decent conditions, transitioned to a state allocation system that quickly became inefficient and corrupt.

The original owners were relegated to oblivion, and the new occupants, mostly tenants, found themselves trapped in a cycle of deterioration: without incentives or resources for maintenance, the houses and buildings literally began to crumble.

With a state incapable of meeting demand and without a market to encourage new constructions, the country plunged into a chronic housing crisis, reflecting the failure of the government's expropriation policies and absolute control.

Cuba: A Housing Disaster

Fidel Castro's measure had devastating long-term effects.

The reduction in rents removed the incentive for property owners to maintain, repair, or invest in their properties.

Over time, Cuba's housing stock has deteriorated alarmingly. Today, more than 39% of homes in Cuba are in poor condition or at risk of collapse, and millions of Cubans live in overcrowded conditions, sharing small spaces with up to four generations under one roof.

Worse still, the policy of expropriation and state control has stifled the development of new housing.

With a nonexistent real estate market and a government unable to meet demand, the housing crisis in Cuba has become a symbol of the failure of the centralized economic model.

The concept of "social justice" ultimately condemned Cubans to decades of housing precariousness and despair.

Spain: Adéjà vuIdeological?

In Spain, unions such as the Tenants' Union of Catalonia are demanding a 50% reduction in rental prices, arguing that current prices are unsustainable. While it is true that the real estate market in Spain is facing serious challenges, implementing such a drastic measure risks replicating the same mistakes made in Cuba.

One of the main problems is the shortage of available housing, exacerbated by complex bureaucratic hurdles and taxes that delay or increase construction costs. This is compounded by a troubling lack of urbanized land available for new developments, which limits the ability to increase the housing supply at a pace that meets the growing demand in large cities and metropolitan areas.

The lack of a solid public housing sector is another key factor putting pressure on the market. For decades, Spain has invested little in social housing, leaving the most vulnerable groups at the mercy of the private market. Unlike other European countries with greater stock of public housing, the Spanish state cannot provide a solid alternative for families affected by high rental prices.

On the other hand, the legal insecurity faced by landlords exacerbates the crisis. Many property owners prefer to take their homes off the residential rental market, concerned about issues such as defaults, lengthy legal processes for evictions, and the risk of illegal occupations. Rather than dealing with these uncertainties, they choose to convert their properties into tourist accommodations or leave them vacant, further reducing the available supply for residential rentals.

Imposing a forced rent reduction by decree without addressing the root issues will only exacerbate the situation. Similar to the Cuban case, discouraging private investment in the real estate market and failing to offer viable alternatives through comprehensive public policies could create a vicious cycle: decreased supply, increased speculation, and a housing stock that deteriorates further. Instead of implementing simplistic solutions, Spain needs a balanced approach that encourages construction, protects both property owners and tenants, and fosters the establishment of a robust public housing stock.

If the government intervenes so aggressively, investors will seek more stable markets, which will worsen the supply crisis and increase housing access issues.

The result? An escalation in the deterioration of the housing stock, a more restricted market, and increased speculation.

The Price of Populism

The case of Cuba demonstrates that populist measures that do not address the structural roots of the housing problem are a recipe for disaster. Imitating Fidel Castro's policies under the pretext of social justice ignores the collateral costs of such decisions.

What might seem like an immediate solution to ease the burden of rent would only deepen the housing crisis in the long run.

Spain, a market economy, cannot afford to follow the path of a failed model like the Cuban one.

Instead of repeating historical mistakes, Spain must find sustainable solutions that promote the development of the real estate market, protect vulnerable tenants, and ensure access to decent housing.

In housing populism, as in history, easy solutions are almost always the most expensive.