Condo Fees: Why Do We Need to Pay Them?

Condo fees, also known as maintenance fees, are a necessary evil. Like taxes, no one likes paying them. But with those taxes come many benefits, like free education and health care. The same goes for condo fees. Building residents get to enjoy a clean building, 24/7 concierge (usually), as well as a number of amenities that offer convenience and positively impact the value of the units.

It’s worth remembering that a condo board is a non-profit entity. This means that no matter how much money it receives in condo fees, no board member can legally pocket any of it. Additionally, board members are owners within the condo, meaning they are personally incentivised to maintain the lowest fees possible for all residents.

What do condo fees cover?

The money that a building collects each month is pooled into a fund, which is then used to pay for certain endeavours. These can be broken down into four categories, so let’s explore them.

1. Amenities

Condo fees are used to repair, clean and generally maintain the building’s amenities, which can include the gym, party room, guest suites, games room, etc. Snow removal, grass cutting and landscaping are also included in the amenities.

2. Capital projects

These are larger undertakings that either increase the value of the condo or offer some utilitarian improvement. Capital projects can include the installation of energy-efficient lighting, repainting of the entire building, or security system upgrades.

3. Utilities

Most condominiums will cover at least some of your utilities, which is why monthly condo fees can be used to pay for water and gas.

4. Unforeseen repairs & deficiencies

Condo boards will always have what’s known as a ‘reserve fund’ to deal with unexpected circumstances. For instance, the elevators may suddenly break down or there could be a flood in the parking lot. In cases like this, money will be pulled from the reserve to deal with costly emergencies.

Why do some condos have very low fees?

Sometimes you’ll find a property with condo fees much lower than the neighbourhood average. Maintenance fees can be lower for two reasons: The building has very few amenities, or the condo board is excellent at managing the building.

Conversion lofts tend to have lower condo fees. That’s because many of these structures date back to the late 1800s, so developers weren’t able to create space for an indoor pool or fitness centre. For example, a building like 110 Hepbourne Street has extremely low maintenance fees because there are no elevators or shared amenities.

Meanwhile, residents at the Toy Factory Lofts in Liberty Village also enjoy low condo fees thanks to their savvy condo board. After a lot of deliberation in 2015, the board was able to reduce maintenance fees by 30%. This is despite the building having a gym, party room, guest suites, and so much more.

How can I tell if fees are reasonable?

A realtor with expertise in the GTA condo market will be able to tell you if a building’s maintenance fees are reasonable. But generally speaking, 65 to 70 cents per-square-foot is considered fair. And that’s regardless of the condo’s location, as fees are not influenced by the neighbourhood.

When assessing condo fees, watch out for red flags. If the building has any ‘special assessments’ or if their fees have been rising by more than 4% per year, ask your agent why. A condo specialist should know these details, and can provide advice accordingly.

I hope this article has been informative! If you’d like to learn more, reach out anytime for a no-obligation discussion about your property search.

You can call me at 416-999-2565 or send an email to monique@strata.ca. I’m always happy to help!