Condo living definitely has its perks. You can take advantage of amazing locations in the heart of urban centres close to public transportation. You can be a part of a community and you don’t have to spend your days doing yard work or home maintenance. But, best of all, you can enjoy convenient amenities like fitness centres, party lounges and pools, all at your doorstep. Sounds great, but how does this affect your bottom line? When purchasing a condo you want to consider your monthly strata fee.
What are strata fees and how are they determined?
Your monthly strata fee is money that’s used by the strata corporation to pay the common expenses of the development. Your individual fee is assessed by taking the total cost of the strata’s expenses and dividing that by the unit entitlement of your strata lot. This means the larger square footage of your home, the bigger your fee.
Where does the money go?
There are two funds that every strata corporation in BC must maintain: an operating fund and a contingency reserve fund (CRF). The operating fund is what is used to pay for common expenses that maintain the building or occur more than once over the course of a year. This includes building insurance, property manager’s fees, gardening, garbage collection, water, maintaining common property, upkeep of amenities, cleaning, repairs, etc. The CRF is the fund that is typically used to pay for expenses that occur less than once a year, or more unusual expenses. This might include a lobby upgrade, new roof, new gutters, etc.
How much is a typical strata fee?
Strata fees vary greatly from area to area and building to building. It is difficult to compare fees directly as they depend on the management style of the strata, as well as the type of amenities that are offered. In general, strata fees in Metro Vancouver range from approximately $0.25/square foot, up to around $0.50/square foot, with the range of $0.35-$0.40 being average. The higher end is typical for buildings with ‘wet’ amenities such as pools, hot tubs, water features and other luxurious expenses like 24-hour concierge service.
Questions to Ask
For new communities, developers create an estimated overall budget so that you know what your anticipated monthly fees will be. If there’s a shortfall between the proposed and actual operating expenses in the first year, then the Strata Property Act will enforce a penalty against the developer. If you’re looking for a second opinion on the overall budget, check with an experienced realtor, lawyer, accountant or property manager.
When you’re purchasing a resale home, you should confirm if your fees include utilities such as hot water, heat and gas. Also, how much money is being contributed to the reserve fund each year and is it enough to cover unanticipated expenses? When is the building warranty expiring? Have any major repairs like a new roof, been recently made or are planned? Check the minutes of the strata council meetings to ensure you have a clear understanding of what’s been completed, where money is being allocated and spent and whether the council is proactive or tends to do the bare minimum which could lead to greater issues. As usual, some basic due diligence before you buy will help you avoid issues down the road.
© Cameron McNeill http://www.macmarketingsolutions.com/blog/understanding-strata-fees