Whether you are a first-time home buyer or a mature adult looking to downsize, condos can be a great way to get or stay in the home ownership game. You may, however, be feeling concerned about condo fees; how do they work and how will they impact your monthly budget. Read on for the six important things to know about condo fees…
1. How are Condo fees charged?
Condo fees are charged on a square foot basis, the larger your unit, the higher your condo fees. Owned parking spots and lockers are also subject to fees.
2. The Building Amenities Will Impact Condo Fees
A large component of condo fees is common area maintenance and repair. Naturally, the more amenities the building has, the more maintenance expenses the property will incur. Certain building amenities such as full-time security guards and indoor pools, can significantly increase the monthly fees so, it’s great to know which amenities are important to you. If you love swimming then a pool may be a high on your priority list. But, if it will only be used as a viewing gallery, you may want to consider a different building
3. Are Utilities Included?
Usually, at least some utilities are included in the condo fees. Older buildings often include all utilities and sometime even cable TV. It’s important to understand which utilities are included so you can make an apples-to-apples comparison when looking at different buildings. Seemingly high fees may not seem as high once you subtract some monthly utilities bills that will be covered by your fees.
4. What’s a Reserve Fund?
Part of your condo fees will go towards building and maintaining a reserve fund. The purpose of a reserve fund is to manage the financial burden of a large repair or the replacement of common elements. In Ontario, we are fortunate that Condo Corporations must maintain a reserve fund that is sufficient for the age and condition of the building and the amount must be professionally reviewed regularly.
5. Will The Fees Stay the Same?
Generally, condo fees will increase on an annual basis. It is common to see a 2 - 3% annual increase in fees, and occasionally, especially in very new or very old buildings, you may see a larger increase. On a lucky year, you may have no increase. Fees are determined by the annual budget determined by the Condo Board. This consistent increase is another reason why older buildings tend to have higher fees.
6. What if the Reserve Fund and Condo Fees Don’t Cover a Repair?
The condo corporation cannot drain the entire reserve fund, so sometimes if a repair or maintenance expense is very large, it will require additional funds to be collected from the unit owners. This can take the form of a specified increase in condo fees or as a special assessment, requiring a lump sum payment by unit owners. Details of such repairs and costs, would need to be presented and voted on at the general meeting.
Condo living can be a great plan for people in many age brackets and life situations. Getting away from the burdens of a large property, having a pool or gym right in your building, living in a location that is accessible to the city or close to nature,
and access to a social life within your own building, are just a few of the positive points to consider. Condo fees are also part of the package, but armed with a little bit of knowledge, you can certainly make an informed decision.
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