Once the condo’s maintenance fees and realty taxes exceed the cost of comparative rentals, there will be no demand to buy it. What do condo maintenance fees include? Here are your new costs: Let’s plug these new numbers into the GDS ratio formula: $23,388 + $3,180 + $1,200 + ($9,600 x 50%) = $31,968. As a result, the … etc. Verify this yourself before buying by requesting a status certificate. Naturally, one easily thinks of cost associated with regular maintenance and repairs: window washing, grass cutting, landscaping, snow removal, carpet washing, hallway painting…. Mission possible: Canadians mortgage-free by 48, CIBC poll finds, The Ontario Fair Housing Plan Two Years Later, First-time Homebuyer Stories: Emma & Evan, The best high-interest savings accounts in Canada for 2021, The 4 best online brokerages in Canada for 2021. This condo is also 800 square feet and you can purchase it for $450,000 with 5% down. Common area maintenance—Your condo fees will pay for trash removal, snow removal, and upkeep of the common spaces in the building. All monthly maintenance fees include exterior building upkeep and, yes, maintenance. However, it might take a while to sell off the units in such a building because of high fees … Another popular misinterpretation about condo fees or maintenance fee: In apartments, condo fee is generally based upon per sq ft basis. With facilities like a Sky Garden, Forest Conservatory, and only 156 units you would expect the condo maintenance fees to be high. Please give us a few minutes of your time to complete the survey and feel free to share this post with anyone who could also complete the survey. PHOTO: High maintenance fees? Condos Must Step in When an Aggressive Owner Goes Too Far ». For example, the condo association takes care of roof repairs, exterior wall repairs, and foundation repairs. Indeed, nothing lasts forever. It is often (but not always) roughly based on the percentage of common interests appurtenant to each unit. The first condo is 800 square feet and has low condo fees at $0.50 per square foot. We could also not repair and not maintain the complex. A special assessment can cost you thousands of dollars so make sure you’re prepared for this very large one-time maintenance fee! Similarly for condos, you will have to pay monthly maintenance fees to your condo's property management. Also, high HOA dues can be a deterrent to future buyers, too, when you go to sell later. This lien will cover the arrears but also all interests and all reasonable legal costs or reasonable expenses incurred by the corporation in connection with the collection or attempted collection of the unpaid amount. It could be that no one on the HOA board has time to look for ways to reduce the monthly HOA dues. For example, it may pay for your water and electricity but not heat. How do they vary across the province. Average condo fees range from around $100 to $700 per month, although these fees can go much higher based on what amenities they cover. We’ve already blogged on condo liens. The monthly maintenance fee at the Waikiki Marina condo was high at just under $600 in 2015. Get involved with your condo; Condo Smarts: Making a case for lighting upgrades (BC) Estates residents waiting for pavement (AB) Apartment and Condo Residents Asked to Take Food Waste Diversion Survey (ON) B.C. So, how do your fees compare to others? While your mortgage payment will be the largest monthly financial commitment, you’ll also need to pay other fees including property tax, insurance, utilities, and condo fees. Condo fees cover the corporation’s common expenses. In Mississauga, maintenance fees hover around 50 to 60 cents per square foot. “The average monthly condo fee is $0.60 per sq ft while older buildings could be $1 a sq ft, and that’s fine, but some buildings are $1.50-2.00 per sq ft, and if you look into the financials of the buildings there’s no reason for them to be so high,” he said. Naturally, one easily thinks of cost associated with regular maintenance and repairs: window washing, grass cutting, landscaping, snow removal, carpet washing, hallway painting…. Common expenses (commonly referred to as “condo fees”) are a recurring grievance for those living in condos. Committing to a home with condo fees of $800 per month could seriously affect your ability to pay down debt and save for the future so it’s important to determine whether you can afford a condo with high maintenance fees. End user condominium purchasers can be surprisingly oblivious to not only their rights owners, but also how good governance can reduce both their short- and long-term monthly maintenance fees. This fund is to be used solely for the purpose of major repair and replacement of common elements and assets of the corporation. ft. More than $1 million (non-waterfront) – $.99/sq. Such condos will be … As you can see, according to this formula, you and your spouse can afford this home comfortably on a combined $100,000 salary. What makes them trend up? In this case, you may be faced with a special assessment, which is a payment you must make to the condo corporation. Does a Mortgage Pre-Approval Guarantee I’ll Get a Home? We have put together a survey, which (we hope) will provide an accurate province-wide picture on condo fees. We’ll assume you and your spouse combined earn $100,000 annually and plan to purchase this condo with a 5% down payment and a five-year fixed mortgage at 2.34%. On the other hand, the shared cost of utilities and the reliability of management to arrange proper funding for common elements could lead to dangerous surges in those fees (which … Let’s look at how lenders use condo fees to determine affordability. That attitude is frustrating to Nellie Miller, 74, who lives on the 16th floor of Pearl Ridge Gardens and Tower. When Low Strata Fees are Good and High Strata Fees are Bad. These contributions are so important to the corporation’s survival that the Condo Act provides condo corporations with a super priority to protect their fees: the infamous condo liens. In total, her monthly fees and utility costs are nearing $700 per month, almost half of her monthly $1,400 Social Security income. ft. three-bedroom unit! Similarly, an apartment of size 1,300 sq ft @ $0.50 cents, condo fee works out to $650 per month. If you come across a condo unit that’s selling at a rock bottom price, but with an unusually high maintenance fees, think twice before signing the contract. If you aren’t sure, use Ratehub.ca’s mortgage affordability calculator and mortgage payment calculator to double check your math. Eventually, you’ll need to recaulk the complex; repoint or fix the cladding; replace the windows; repair the balconies and their railings; replace the membrane above your underground garage; repave the laneways; replace the roofs; replace the elevators…. On one hand, high condo fees could reflect outstanding amenities, as listed in the article, and could include all utilities minus, say, cable. But, before we start, have you ever wondered how your fees compare to others? That’s $386.60 per month on a 594 sq. Usually, a special assessment is tied to a particular project, such as replacing the roof or repairing the parking garage. Please share this post with friends and neighbours. contribute to your reserve fund and pay for maintenance of common areas in the building It’s easier to afford a property with lower condo fees but there’s one caveat here: If the fees are too low, the condo corporation may not have enough cash flow to pay for larger repairs. Add up all of the corporation’s expenses and divide them between the owners based on the set percentage. Condo fees that are too high can be a sign of poor money management on the part of the condo board, but you will have to review the condo documents before being able to say for sure. In a condo and HOA, the monthly fees are called “common charges.” Like a co-op, this fee covers items such as salaries and building maintenance. In some parts of Ontario, condo fees can be overwhelmingly high. Let’s look at two examples of a $450,000 condo with very different condo fees. ft. two-bedroom unit, or $881.20 per month on a 1,354 sq. South Beach Condos: Median HOA Fees. Condos.ca has reported that the average maintenance fee for Toronto was 65 cents per square foot last year, with 22 cents at the low end and $1.35 at the high … Let’s look at how lenders use condo fees to determine affordability. The short and sweet answer to this is, no, not really. Condo fees cover the corporation’s common expenses. Typically, higher-service condos include higher HOA fees because they need to cover more staff and amenities. Older simple condo buildings without any amenities that have recently undergone major repairs such as rain screening and brand new simple condo buildings very often have lower strata fees. For the most part, the lower maintenance fees … Though, it’s worth mentioning that although condos have maintenance fees, they still work out cheaper than townhouses overall. How much time does a condo have to register a lien. Using Ratehub.ca’s mortgage calculator, we’ve determined that your costs will be: Now let’s plug these numbers into the GDS ratio formula: $23,388 + $3,180 + $600 + ($4,800 x 50%) = $29,568. How much your HOA fees will cost is based on the square footage of your condo, whether you live in a high-amenity or low-amenity building, and other factors. So for first-time investors or aspiring landlords, we’ve hunted down some condos that have shown top rental yields, as well as the lower-end of maintenance fees. Say, if you buy a $700 sq ft condo (common entry level condo apartment), your condo fee can be $0.50 cents p.s.f or $350 per month. Conversely, a low-amenity condo includes lower HOA fees, since the HOA doesn't need to pay for full-time staff, a pool, a gym, etc. “Even current owners don’t know how condo corporations are run,” said Alex Balikoev, senior vice president of sales at Sotheby’s International Realty Canada. What is the First-time Home Buyers’ Tax Credit and How Does it Work? These costs can add up, especially in older buildings, where condo fees have been known to skyrocket in order to pay for expensive building repairs. But does a pre-approval mean you’ll get a mortgage on a home you … Read More, A recent poll by CIBC revealed that Canadian mortgage owners believe they will be mortgage-free by 55. The survey will take only a few minutes. The more answers we get, the more accurate will be the picture. Surely we’ll save tons of money that way. By law, every corporation is required to maintain and contribute to a reserve fund. It might not sound a lot, but when you factor in all other costs associated with home ownership fees – maintenance fees can soon add up. Avoiding high maintenance fees and special assessments. Large, high-rise condo fees are higher than those of other types of condo units as they must maintain a larger-than-normal reserve maintenance fund. It’s difficult to know and is often difficult to compare from one building to the next. Either through sudden and unpredictably high increases from one year to the next or, even worse, through Special Assessments or loans. We could turn the elevator off every second day. We can calculate your GDS ratio using the following formula: Mortgage payments + Property taxes + Heating costs + 50% of condo fees ÷ Annual income. !”) or even if they have a claim against the corporation (“I’ll pay my fees when you fix my roof!!”). Bad Management of Condos Condo fees (often called strata fees) are a mandatory monthly payment you make to your condo corporation (the organization that runs your condo building) to cover these costs: Condo fees can vary. Condo fees are a tough factor to understand accurately without proper due diligence. Parking will cost you anywhere from $50 to as high as $100 more and a locker can cost an additional $15 to $25 per month. We often hear of directors who run their electoral campaign on (or brag about) not increasing fees. Indeed, whenever owners default on their obligation to pay their share of the common expenses, the corporation has an automatic lien against the defaulting unit. This is because the newer condo building is under warranty and is just newly completed, so maintenance requirements are low as with newly rain screened older condo buildings. When you’re deciding whether or not you can afford a condo with high maintenance fees, the first thing you should look at is a formula called your gross debt service (GDS) ratio. While you may be able to afford this condo now, an increase in condo fees could make it unaffordable in the future. A status certificate is a report on the current state of the condo corporation. Post was not sent - check your email addresses! When she purchased the one-bedroom unit, her maintenance fees were under $100 per month. This percentage is specified in the declaration. Tell me where you want to cut. The more utilities you use (assuming they are common), the more expensive it gets. Prices were skyrocketing with no end in sight and buyers … Read More, TFSA Contributions, Withdrawals, Transfers. How does the age of your building affect common fees? And it is, coming in at Too many variables go into the mix: the age of the building; its size; the amenities it offers; etc. landlord ordered to pay strata $15K after tenants rent condos on Airbnb They seem to always go up; they seem to never cover enough and owners often feel they have no control over them. It is best (but not essential) to have in hand your most recent budget to be able to provide a full picture. To determine whether you can afford a condo with high maintenance fees, let’s take a look at average maintenance fees, what they cover, and some calculations you can do to determine if a condo with high maintenance fees is affordable to you. ft. one-bedroom unit, $628.02 per month on a 956 sq. There are a host of factors that determine how high or low a building’s condominium fees are, but that’s a topic we’ve covered before. Now they are more than $600. © 2021 Gowling WLG (Canada) LLP, all rights reserved. In our second example, let’s assume you’re buying a condo with much higher condo fees at $1.00 per square foot. Buying a condo with high maintenance fees shouldn’t be taken lightly. There is a common myth that older condos charge higher fees in comparison to newer condos in Mississauga. Utilities—Your condo corporation may pay some or all of your utilities. The maintenance fees have jumped from 51 cents to 63 cents per square foot. Canadians a month, save money and make better financial decisions using Ratehub.ca, Once you’ve decided to buy a home, you should get a mortgage pre-approval so you know how much you can afford to spend. ft. Less than $1 million (waterfront) – $.81/sq. Make sure there’s plenty of room in your budget to afford these fees. Condo fees also cover shared services like groundskeeping, lawn care, snow shoveling, and other communal grounds-related upkeep. It’s easy to do by using one of the social media button at the bottom of this post. Owners have a statutory obligations to pay common expenses to ensure the corporation functions properly. Unlike a … Fortunately, healthy condo corporations shouldn’t have to levy special assessments as long as they keep a large reserve fund. Canada Condo, Strata & HOA News. Then there is the fun stuff: the state-of-the-art gym; the pool; the party room, the movie theatre… You can only postpone the inevitable for so long. These cover the cost of maintaining the grounds, buildings, and shared amenities. In this post we discuss what goes into the calculation of common expenses. Your GDS ratio is used by lenders to determine whether you can afford a mortgage and maintenance fees. 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