They could gain the title to the property and even pass it on to their children or relatives.
Holding onto state housing originally designated for specific workers has been a widespread but usually informal part of Cuban life - the new decree is set to formalise this.
Cubans still cannot sell their homes to anyone but the government, although they can swap housing with government approval - a process that can take years to complete.
Officials at Cuba's National Housing Institute said the decree was likely to be the first in a series in changes to housing legislation.
"This is like no man's land that they are legalising," Oscar Espinosa Chepe, an economist and critic of the government, said.
"It gets rid of that insecurity many people had and alleviates bureaucratic pressure."
Home to 11.2 million people, Cuba suffers from a severe housing shortage.
Officials say they need half a million additional homes, but critics say double that number is required.
Raul has already scrapped bans that prohibited Cubans from owning cell phones in their own names, staying in tourist hotels and buying DVD players, computers and kitchen appliances.