Planning On Buying A Condo? Here Is Some Important Information You Need To Know About Strata Fees
When you buy a condo, you will inevitably have to pay strata fees or maintenance fees, and this will be a monthly payment in addition to your mortgage payment. Strata fees should be an essential part of your decision making process of whether to buy or not, and is one of the factors that will determine how much home you can afford.
Strata fees are mandatory monthly fees that cover two portions – the Operating Fund with covers typical utilities such as water and garbage collection, maintenance of common areas, landscaping, the gym, pool, building insurance. The other portion is the Contingency Reserve Fund, which is used to pay longer term expenses such as building upgrades and major repairs.
Typical condo fees relate directly to the size of you unit, measured in square footage. So the larger the unit, the higher the strata fees. The rate you pay per square foot depends on the facilities provided in the building. So buildings with pools, gyms and other amenities require higher monthly fees. Typical strata fees can range anywhere from $0.40 per square foot to $1.50 or higher. Older buildings have higher fees due to the additional upkeep needed to maintain the building.
Each condo complex has a strata corporation or condo association made up of the owners and is responsible for maintaining the building and the community. This body is responsible for budgeting the yearly costs, finding the vendors to complete the necessary work, and project into the future as to what upgrades will be needed and how to fund them.
Every year an Annual General Meeting is held and owners get a chance to see the proposed operating budget and strata fees for the ensuing year, and vote on them.
While condo fees may add hundreds or even thousands of dollars to your monthly expenses, they do indirectly and directly cover the typical expenses that freehold homeowners pay. There may be savings as well, as a strata can negotiate a better deal with economies of scale. So paying a monthly fee to have access to building amenities and having maintenance managed for you could be a worthwhile trade off.
Here is a checklist from the Canada Mortgage and Housing Corporation on the pros and cons of condo ownership.
Buying a home is usually the largest financial decision a person can make. Let one of our expert real estate advisors help guide you in making the right decision for you.