Buying a new apartment: Some Vastu tips you can use

If you are about to buy a new home or an apartment, there are several Vastu aspects of the property that you must check. Here’s a quick guide

The Indian architectural science of Vastu Shastra, has been a basis for identifying and developing the best living spaces. Vastu-compliant plots and homes, help the inhabitants to live their lives with more happiness, wealth, health and prosperity. This ancient practice has gained popularity in the real estate space, for identifying the best places, plots and structures for residential, as well as commercial purposes.

Vastu compliant entrance

While evaluating the design plan or layout of a plot or a construction (flat or apartment), the first consideration should always be for a good entrance. The entrance holds the key to ushering in positivity and happiness for the entire family.

A south-west entrance is among the least Vastu-compliant entrances and families living in such homes, can face monetary and relationship issues to a great extent.

On the contrary, if you have an entrance in the north, you can expect great success in monetary and business matters, as well as opportunities in your career. If your chosen property or apartment does not have a Vastu-compliant entrance, you can still buy the property and apply certain simple Vastu remedies.

Vastu compliant room direction

The correct location for a room, ensures that you benefit the most from that room. Each room has a positive or negative effect, on the lives of inhabitants of the house, depending on the zone in which it is located.

For instance, a living room in the east zone, is ideal for developing and strengthening social connections. On the other hand, a bedroom between the east and south-east should be avoided as per Vastu. Sleeping in these zones, results in increased anxiety and disagreements with one’s spouse.

One should avoid building a toilet between the north and the north-east zones in the house. It can severely affect the immunity and health of the members of the family living in the house. For kitchens, the south-east is an ideal zone. One should avoid having a kitchen in the north-east and south-west zones.

Panchtattava or the analysis of the five elements

A living space is divided into 16 zones or directions in space. Each zone has a corresponding main element that affects different aspects of our life. For example, the north zone has water as the main element. The main attributes of this zone are wealth, growth, career, monetary gains, etc. Consequently, any imbalance in this zone, has a direct impact on the career, business and monetary health of the inhabitants.

Similarly, fire is the main element of the south zone. The main attributes of the south zone are sleep and relaxation.

While purchasing a home, one needs to check the location of different rooms and internal elements that make up the home. These include kitchen, toilets, balcony, slopes, open areas, water tanks, gardens, service lanes, water storage of neighbours, rain water drainage, the building’s height, shafts, etc. It is important to verify that each of the 5 elements or Panchtattava, is present in its respective zone – water in the north, air in the east, fire in the south, earth in the south-west and space in the west.

Modern Vastu and space programming

What if you have already purchased a property or paid the booking amount? In such cases, you can use the fourth check of Vastu – space programming. With modern Vastu applications and techniques, you do not need to deconstruct or demolish your property. Through simple and effective Vastu techniques and remedies, you can balance the elements in a particular zone. The use of colours, shapes, lights, metals and symbols, are highly effective in this regard.

Many factors determine the fate of a home loan application. Thus it will be better to assess your home loan eligibility prior to making a plan for purchasing a property

Credit score/report

The primary and common cause for the home loan application rejection is a poor credit score. The first step taken by lenders towards processing of any credit facility by lenders is to obtain your credit score and credit report from any credit information bureau, like CIBIL. Any default on your part in the repayment of your credit card bill or any other loan is reported by these credit information bureaus to the lender.

Any settlement with the lender with regards to any outstanding loan amount will negatively impact the credit score. Any waiver of accumulated interest by the lender on an outstanding amount to settle due amount will account for another negative aspect contributing to the rejection of a home loan eligibility. In such cases, the lender writes off such unrecovered amount in its books and reports the same. The nomenclature ‘write-off’ has a negative connotation and this may discourage the new lender from sanctioning your loan.

Not all the cases, where the lender agrees to forego any amount due to it, are treated as write-offs, though. In cases of genuine mistakes on the part of the lender, the outstanding amount is waived and the lender is supposed to report such remissions as waivers and not as write-offs.

In case the lender has reported a waiver as a write-off, you need to ensure that the lender rectifies such errors. For example, this may happen if a credit card, with fees applicable on it, was sent to you even though you may not have applied for it. In such situations, the credit card issuing company has to forgo the amount, if the person to whom such a card is issued, refuses to pay. In most cases, the lender will report remissions of such small amounts as write-offs. Although the amounts involved may be small, the prospective lender may reject your home loan application.

Your age

Lenders generally do not grant home loans, to salaried individuals who have retired and to self-employed people who have completed 65 years of age, even if adequate security is provided, in the form of other immovable property. The reason for this is that the lender is interested in getting his home loan serviced each month and is not so interested in the value of the property that is mortgaged. So, unless you have a sufficient and regular flow of income, you will not be able to get a home loan.

Earning history

Lenders generally are not willing to give home loans to people who have not completed a certain minimum number of years in employment or in business. Lenders do so, to satisfy themselves about the consistency and quantum of the applicant’s income flow. However, a prior earning history is not a strict requirement. Lenders do consider the home loan application of professionally qualified persons favorably, even if they do not have much of an earning history. The same applies to people employed in permanent posts in government departments.

The Union Budget 2017 promises to continue economic reforms, control inflation and prudent fiscal management. However, it provides little impetus in the short term to the real estate sector other than a boost to the affordable housing segment.

The infrastructure status for affordable housing and tax relief for real estate developers are positive steps but not enough to boost residential sales in the short term.

The Union Budget 2017 promises to continue economic reforms, control inflation and prudent fiscal management. However, it provides little impetus in the short term to the real estate sector other than a boost to the affordable housing segment.

The infrastructure status for affordable housing and tax relief for real estate developers are positive steps but not enough to boost residential sales in the short term. The government has provided up to Rs 12,500 income tax benefit to individuals, which is insufficient to provide the demand side push to the sector, says a research report

Here are Budget proposals and their impact that are likely to influence the realty sector going ahead:

1) Infrastructure status to Affordable Housing – boost for affordable residential sector

Impact: Union Budget 2017-18 granted the much-demanded “Infrastructure” status to affordable housing. The step is well aligned with the government agenda of ‘Housing for All by 2022’. This will allow easier access to capital for developers, at a much lower rate with a longer amortization period. In addition, it allows developers access to viability gap funding and tax incentives. For affordable housing purpose instead of the built up area of 30 and 60 sqm, the carpet area of 30 and 60 sqm will be counted. The 30sqm limit will apply only in case of municipal limits of 4 metropolitan cities while for the rest of the country including the peripheral areas of metros, limit of 60 sqm will apply.

The government has also extended the time of completion of such projects from 3 years to 5 years. Buyers of affordable housing got a boost with the announcement of interest subvention of 4% and 3% on loans up to INR0.9 million (USD13, 318) and INR1.2 million (USD17, 758), respectively. The proposed deduction of the income tax rate to 5% for taxpayers having income less than INR0.5 million per annum (USD7, 400 million) will increase the disposable income of the common man which will, in turn, raise spending power and increase investment in the affordable segment.

Thus, more projects will now be eligible for profit-linked income tax exemptions. So far, we have seen limited participation from private developers in the affordable housing segment despite high demand. Profit-linked exemption along with the infrastructure status for affordable housing will push developers to undertake more affordable housing projects, thus increasing private player’s participation in the sector.

2) 10 million homes to be built by 2019 for the homeless and those living in kutcha houses

Impact: To stimulate the rural housing sector in India, INR230 billion (USD3.4 billion) has been allocated under the Gramin Pradhan Mantri Awas Yojana. In line with their aim to promote affordable housing not only in cities but also in rural areas, the government intends to complete 10 million homes by 2019.

Currently, the housing sector is active mostly in Tier-I and Tier-II cities in India; however, the scheme will not only provide necessary housing to the poor but also promote the residential sector in rural areas.

3) Tax breather for notional rent income on unsold unoccupied completed projects

Impact: At present, houses that are unoccupied after getting completion certificates are subject to tax on notional rental income. Builders for whom constructed buildings are stock-in-trade, the rule will be applicable only after one year of receiving the completion certificate. The law will provide some breathing time for developers to liquidate their inventory.

4) Holding period for immovable assets reduced from 3 years to 2 years and indexation to be shifted from 1.4.1981 to 1.4.2001

Impact: This is a significant step regarding capital gains taxation provisions on land as well as buildings. Reduction in the holding period and amendment in the base year indexation will considerably reduce capital gains tax providing tax relief for several asset holders.
It is likely to increase the government’s tax base through the immovable property and encourage the mobility of capital assets. With the proposed taxation provisions, property holders are more likely to engage in the sale of real estate, thereby giving a much-needed fillip to the sector.

5) National Housing Bank (NHB) will refinance individual housing loans of about INR200 billion (USD3 billion) in 2017-18

Impact: The demonetization drive towards the end of 2016 has resulted in surplus cash within the banks; thereby allowing major banks across the country to lower their lending rates.

The lending rate cut will be welcomed by not only new homebuyers but will also be a reason to rejoice for homebuyers who have already taken a flexible housing loan. However, the refinancing scheme from the NHB will improve the sentiment of current homeowners, especially those subjected to high lending rates in the past, opine experts.

6) Increase in investment in infrastructure and development projects

Impact: Following the announcement of several major infrastructure projects in 2016, the union budget disclosed one of the biggest budget allocations for the infrastructure sector. About INR1310 billion (USD19.4) billion) has been allocated for railways and INR64.9 billion (USD0.9 billion) for highways which include 2,000 kms. of coastal roads, facilitating better connectivity between major port cities such as Mumbai, Chennai, Kochi and other cities and small towns.

Similarly, select airports in Tier-II cities will see investment for operation and maintenance through the public-private partnership (PPP) model. The government plans to elevate the current state of infrastructure in India aiming to create a state of the art infrastructure network. Improved infrastructure is more likely to catch the attention of foreign investors and also aid and enhance investment in the real estate sector. The government is looking to upgrade airports in tier-II cities and proposed to monetize unused land assets. Another positive step is the decision to introduce a bill to resolve disputes in PPP projects, predict experts.

7) Capital gains tax liability changed for Joint Development Agreement (JDA) signed for development of property

Impact: If a Joint Development Agreement is signed for the development of the property, then the capital gains tax will only be paid in the year of completion of the project. Apart from several other measures to reduce capital gains tax, this step will provide tax relief not only to the landowner but also the builder/promoter, thereby decreasing their liability.

8) No cash transaction above INR0.3 million (USD4439) permitted

Impact: As one of the extensions to the demonetization drive, the government plans to disallow any cash transaction above INR0.3 million (USD4439). The real estate sector involved several cash transactions before the demonetization drive. However, buyers and developers had turned cautious post-demonetization with a notable reduction in the number of cash transactions.

Thus, this provision may only lead to a nominal impact on the sector in the short term, while it will lay down the foundation for a transparent economy and boost foreign investment.

9) Abolition of Foreign Investment Promotion Board (FIPB)

Impact: Over the last two years, the government has implemented several reforms to encourage Foreign Direct Investment (FDI) in India. As more than 90% of the total FDI inflows currently take place through an automatic route, the government has decided to do away with the FIPB in 2017-18.

This is in conjunction with the government’s view to further liberalize FDI norms and attract foreign investors. Under the automatic route for FDI, the foreign investors will not require any prior approval from the FIPB and will only be subject to laws defined for each sector.

10) Introduction of innovative land-pooling mechanism for development of the new state capital of Andhra Pradesh

Impact: The budget announced that the new state capital of Andhra Pradesh is being constructed by an innovative land-pooling mechanism without the use of the Land Acquisition Act. Land acquisition remained a much-debated issue and a major hurdle with respect to large-scale developments.

The new land pooling mechanism may significantly reduce land-related disputes and increase the speed of development. The exemption of capital gains tax will uplift the confidence of landowners whose land is being pooled for the creation of the capital city under the government scheme. However, the exemption is only limited to those who were the owners of such land as of June 2, 2014, the date on which the state of Andhra Pradesh was reorganized.

Conclusion

Overall, it was a positive budget for the sector and the government has done well to create awareness for the need to increase tax compliance. Demonetization was a temporary setback and the economy may bounce back. In particular, we look forward to the gains once Goods and Services Tax (GST) is rolled out later this year.