If you’re thinking about buying a condo, you’ve probably asked what do condo fees cover? Generally speaking, condo fees (or strata fees) cover building maintenance, amenities, and utilities. Condo fees aren’t cheap but it’s the price you’ll have to pay if you want to buy a condo.
The tricky thing is, what condo fees cover differ for each individual building. If you’re starting to look at condos, you’re going to have to ask what do condo fees cover at every single building. Determining if the fees are reasonable is subjective (most people will say they’re too much), but let’s take a look at what condo fees cover.
What do condo fees cover?
Again, what they cover differs per building, but here are some of the general things you can expect.
Building maintenance – Security, the building superintendent, and cleaners are the people you’ll see on a daily basis, but there are also elevator repairmen, landscapers, window cleaners, snow removal, and general contractors to consider. Your building will also require general repairs and upkeep which your condo maintenance fees help pay for.
Reserve fund – Part of your condo maintenance fees goes towards the condo reserve fund. This fund is meant for major repairs such as roof repairs or new HVAC units. Older condos require a large reserve fund since they’ll probably require more repairs. Having a fully funded reserve fund is a good thing because if there is ever a shortfall, owners may be forced to pay a special assessment fee.
Utilities – This is where things get tricky. In my building, the condo fees cover just water (cold), and central air. So I need to pay for heat, electricity (hydro) and hot water. Some buildings include everything. There are even a few buildings out there that include internet and cable tv in their condo fees while some buildings charge a separate fee for parking maintenance (which applies to parking owners only).
How much do they cost?
You’ve probably figured out by now that my answer is “it differs” so let’s take a look at the average cost of condo fees. These days the average condo fee in Toronto is $0.55 to $0.65 per square foot, while you can expect to pay about $0.30 to $0.40 per square foot in Vancouver. Don’t ask me why there’s such a huge difference, I really don’t know have an answer for you.
There are a few things we can generalize when it comes to condo maintenance fees, but again, things differ per building. Older condos (think 15+ years) tend to have higher condo fees since they require more maintenance. Taller buildings usually have lower fees since there are more units which mean there are more people to split the cost with. Buildings with lots of amenities e.g. a swimming pool, hot tub etc. tend to have higher fees too.
If you plan on buying a pre-construction condo, don’t get too excited about the low condo maintenance fees that the builder has estimated. These estimates are famous for never being accurate and usually increase drastically in the first few years. The same applies to buildings that are just a year or two old, there’s a good chance those condo fees will increase.
When looking at condo fees, you need to think about all of the above. A building with low maintenance fees doesn’t necessarily mean it’s a well-run building; it might signal that the reserve fund requires more money. You’ll want to have your lawyer go through all the paperwork before you make your final purchasing decision.
Are condo fees worth it?
Well, I don’t think anyone thinks condo fees are worth it. Heck, you could argue that they’re a rip-off especially when you compare them to Vancouver, but they are necessary.
Some homebuyers will insist on buying a house instead of a condo so you don’t need to worry about those condo maintenance fees, but that argument only goes so far.
If you own a house, you still have maintenance and upkeep to pay for. Your driveway won’t shovel itself and if your furnace breaks, you’ll need to replace it. The good thing is, you get to choose when you make those repairs, but nonetheless, you’re still on the hook for those costs.
The other argument is that if you didn’t have to pay monthly condo maintenance fees, that would allow you to take on a larger mortgage. That may sound appealing in theory, but that means you’ll be taking on more debt and with the price of houses in Canada these days, that might not even help that much.
No matter how you look at it, being a homeowner is expensive. Condo fees are just part of the overall costs that you’ll be paying.