If you’re in the market to purchase a condominium — whether it’s an apartment, loft, townhome or condo-hotel unit — you’ll need to familiarize yourself with monthly maintenance fees (also known as condo strata fee and condo maintenance fees).
Monthly condo fees play a critical role. Low fees can be attractive to potential buyers, while fees that include a variety of features can be an indication of good value.
To understand what condo strata fees are, how these fees are calculated and what’s covered, check out this primer on condo maintenance fees.
What Are Condo Maintenance Fees?
To pay for condo maintenance the owners of condo units pay a mandatory, non-negotiable monthly maintenance fee. Each condo owner must pay this fee. In turn, the money collected pays for the ongoing upkeep and repairs required to keep the building or complex operating at maximum capacity (and to maintain the market value of the complex).
How to Calculate Condo Maintenance Fees?
Typically, you can calculate condo maintenance fees using per square foot cost.
To calculate the per square foot cost use the condo building’s annual budget. Each year, the condo board will review all expenses before setting this budget. Once set, the board will then use this budget to calculate the per square foot maintenance fee. Each owner will pay a monthly fee based on the square footage of their unit.
While the calculation of this cost is the same for each condo association, the actual per square foot cost can vary, sometimes quite dramatically. That’s because factors that impact condo maintenance fees can vary from building to building. For instance, the style, type or number of amenities can influence maintenance costs. Other indicators are property taxes, utility costs, the age of the complex, and other features.
For example, say a condo complex includes 20 units with a total of 15,000 square feet of living space. The condo board anticipates $120,000 in annual maintenance costs. Therefore, the condo maintenance fee would be $0.67 per square foot.
[$120,000 / 15,000 SF = $8 per SF per Year = $0.67 per SF per month]
Based on this, a condo that is 650 square feet, would cost the maintenance fees for that condo would be $433. If the condo unit was 1,200 square feet, then the owner would pay $804 in monthly strata fees. In this way, the owners of larger condo units with more living space end up paying a larger portion of ongoing condo maintenance costs.
How Can Buyers Assess Condo Fees?
When you view a condo, you should get a fact sheet that lists both square footage and your monthly condo fees. Simply divide the fees by your square footage to see how much you’ll be paying per square foot.
For example, $350 per month for a 695 square feet condo means you are paying $0.50 per square foot.
Factors That Influence Condo Maintenance Fees
Many factors influence the overall cost of condo maintenance fees, including the location of the building, the type and number of amenities, as well as the age of the building, among other factors.
The following are some additional factors that will influence condo maintenance costs:
- Condo maintenance costs are higher in developments with a more wide range of amenities.
- Condo fees are typically higher in older buildings since they require more maintenance.
- Monthly fees tend to be higher in smaller buildings since costs are split among fewer owners.
Average Condo Maintenance Fee
Since many factors determine your monthly condo fee, it’s difficult to give an exact calculation or formula—and even more difficult to come up with a blanket average cost. Still, many condo buyers, particularly investors, will compare condo listings based on a per square cost. For that reason, many companies and analysts will track ongoing maintenance costs in each city, and use this as a benchmark when comparing condo listings.
According to MLA Canada, the average condo fee in 2021 in Metro Vancouver, for pre-sale projects, was $0.45 per square foot. The range ran from $0.20 per square foot, up to $0.70 per square foot, with higher costs attributed to buildings with ‘wet’ amenities, such as pools, hot tubs and water features and with complexes with more luxury expenses, such as 24-hour concierge service.
The average condo maintenance fee in Toronto, for resale condos, is approximately $0.65 per square foot, according to data from National Bank, but can reach as high as $1 or more per square foot.
What Are Condo Maintenance Fees Used For?
In general, condo fees are split into two funds:
- The Operating Fund
- The Contingency Reserve Fund (CRF)
The Operating Fund
The Operating Fund pays for day-to-day costs like property management fees, building insurance, garbage collection, gardening, maintenance of common property and cleaning, amenities, and routine repairs.
While all condo buildings must pay communal utility costs—electricity for elevators, complex lights and water to maintain fire sprinklers—some condo associations will also use monthly condo fees to pay for utility services used by individual units. Check with your condo board, or review the listing sale sheet, to find out what the monthly strata fees cover.
Another cost that is paid out of the operating fund is the costs associated with the upkeep of common areas, such as parking garages, pools, outdoor courtyards, elevators and recycling sheds. Then there are the services that are required to maintain these spaces, such as snow removal and landscaping.
While the specifics on what is covered by monthly condo maintenance fees will differ, it’s typical for most buildings to cover the following basic expenses:
- Utilities
- Trash and recycling collection
- Snow removal and landscaping
- Maintenance and upkeep of common areas, including patios, sidewalks, lobby, elevators, parking garage, swimming pools, party rooms, tennis courts, etc.
- Ongoing physical exterior repairs and maintenance (such as painting the walls, updating light fixtures, etc.)
- Salaries of on-site staff
- Property taxes
- Insurance
- General administrative costs (including legal fees, audit fees and consulting fees, etc.)
The Contingency Reserve Fund
The CRF, commonly referred to as the ‘reserve fund’ covers major unforeseen major expenses as well as more long-term upgrades and replacements.
Every month, a percentage of the condo fees goes toward shoring up the reserve fund of a building. From this fund, the board will pay larger expenses, such as the replacement of a roof or the general upkeep of balconies or patios. While the specific costs will vary, in general, the CRF is used to pay for strategic updates that are required to keep a building or complex in good operating condition.
The recorded health of the contingency fund is in the Depreciation Report — a public report that details the repair, maintenance, and renewal cost over 30 years for all components in the strata building or complex.
What Happens if You Don’t Pay Your Condo Maintenance Fees?
While there are exceptions, condo owners or tenants typically pay their condo maintenance fees monthly. If an owner refuses to pay condo maintenance fees, the condo board can take legal action. A lien — which is a legal right to collect money owed when a unit is sold — or a court order can be issued for non-payment of funds.
How Do Monthly Condo Fees Affect the Value of Your Property?
The maintenance fees paid by condo owners will have an impact on the value of a condo. In general, a condo building with higher monthly fees will attract fewer potential buyers, since the overall cost of ownership is now higher; however, this is not a hard and fast rule, since many luxury units will have significantly higher fees and can still attract a number of potential buyers.
Still the per square foot maintenance fee, and what it pays for, is certainly a consideration for any buyer; the more amenities and features the fees pay for, the easier it is to justify the cost.
Low maintenance fees aren’t always good either, because lower fees can mean poor or mediocre maintenance and planning and the potential of a fund shortfall to pay for upkeep and repairs of a building. When this happens, the condo owners must pay for a special assessment — a repair or replacement that must be paid in addition to their regular monthly maintenance fees.
This is an important consideration to make if you’re buying the property as an investment.
5 Tips to Help Reduce Condo Maintenance Fees
Over the last few years, strata fees have risen sometimes dramatically. Part of the reason condo maintenance fees can be higher is due to the increase in the cost of living; another reason is rising insurance premiums either because buildings are getting older or because of the higher frequency of damage due to weather events. To keep maintenance fees down, it’s important for condo boards—and condo unit owners—to consider how to reduce monthly maintenance fees.
To help, here’s a list of five tips to help reduce monthly maintenance costs.
#1. Conserve Energy
One strategy that can help lower strata fees is to implement updates to reduce the amount of energy and utilities used by the condo complex and by individual unit owners.
If the board hasn’t already done so, it’s a good idea to replace all incandescent light bulbs with efficient LED bulbs. Another option is to install motion sensors that trigger lights on and off, rather than keeping lights on when the common area is not in use.
Water use can be reduced with the installation of water-saving faucets and flow restrictors.
Other options include updating water tanks to gas units and replacing old boilers with high-efficiency units.
#2. Replace Inefficient Appliances and Components
Maintaining outdated systems can be costly. While it might be pricey to replace large, expensive appliances, such as the central air conditioner, the energy savings can be quite significant.
#3. Make Bulk Purchases When Possible
Buying in bulk can translate into massive savings and where and when possible, condo boards should consider how to maximize these savings. Whether it’s buying fertilizer or salt for icy driveways or sanitizer, the idea is to cost out smaller, more frequent purchases and compare it to large, more infrequent purchases and the associated storage costs.
#4. Preventative Maintenance
An effective maintenance schedule helps prevent unnecessary and costly repairs. To keep monthly maintenance costs down, condo boards need to monitor and update preventive maintenance schedules.
#5. Automation and Digital Tools
The advancement of technology and digital apps means condo boards can create more efficient and easily accessible tools that can help increase communication and decrease costs. These tools can include systems that allow for digital payments and transfers, proxy or e-voting to allow for more board participation, digital tools for sending and receiving documentation, dashboards that track and maintain preventative schedules and service requests, among others.
While each board will need to assess their needs, using digital tools and software can help cut back on administrative costs, the need for maintenance supervision and even on-site staff.
Final Thoughts
Buying a condo is great if you’re looking to become a homeowner but don’t want to spend hours or days maintaining your property. The ongoing maintenance of the condo building is funded by your monthly maintenance fees, which are calculated based on the ongoing costs to maintain the condo building. When assessing the value of condo fees, it pays to understand how these fees are calculated and what these fees actually pay for — with well-managed strata properties benefiting from careful planning and proper financial management.
