Let’s get one thing out of the way — nobody, absolutely nobody, wants to pay condos fees and if you meet someone who does… be wary of that person. Paying a fee in addition to your mortgage payments is understandably annoying, and even when such fees are transparent and completely justified, they still feel like additional charges.
In a way, condos fees are similar to taxes: they cover things that you use but given that they’re not paid for like a standard transaction — money for a service or product — it’s easy to feel like you’re getting ripped off. For anyone who harbours concerns about be taken advantage of, condo boards don’t operate for profit (your fees aren’t going under somebody’s mattress) and members of the board are the very same people you say hi to, or ignore, in the hallways of your building.
Where Do My Fees Go?
First and foremost, your condo fees will cover most if not all of your utilities: hydro is usually separate. Fees are generally tied to square footage but that’s not always the case.
Your condo fees will also pay for shared amenities; that pool and fitness centre isn’t free; thus, all residents pay to keep them operating and ensure they’re properly maintained. Less amenities can mean lower maintenance fees which is why some buyers prefer boutique residences that don’t offer all the extra bells and whistles. On the other hand, those who seek out luxury residences don’t generally view high fees as a deterrent. 80 Yorkville Ave has some of the highest fees in the GTA; it’s also one of the most desirable luxury buildings.
Reserve fund: If you’re planning to buy a condo then it’s wise to familiarize yourself with this term. A reserve fund is a large sum of money that’s kept in the event of an unexpected expense, and without a reserve fund, condo residents could be on the hook for major repairs. If there’s major structural damage to the building, or something smaller like a leaky roof, a reserve fund can be drawn upon to make the necessary repairs.
Lastly, maintenance fees go towards capital projects. Whether it’s dated amenities or a new exterior paint job, having money set aside for capital projects makes a lot of sense, because residents have a vested interest in keeping the building up to date.
Yes, Older Buildings Can Have Higher Fees
While it’s certainly not true for all buildings, older condos tend to have higher fees; just not for the reasons you might think. Loft residences are often the result of a conversion from an old factory or warehouse, and yet loft residences tend to have low maintenance fees. So why do older condos have higher fees? In a word: Space.
Condos built before 2000 were operating in a very different market. They were built as cheaper, more convenient alternatives to single family homes and as a result, had large layouts. But modern condo developers have done away with the large layouts of the past in favour of smaller, more functional units, thereby allowing a higher number of units per floor in a building. As condo fees are tied to square footage, older condos with large layouts have higher fees.
The Loft Angle
Hard lofts also offer a reprieve from higher fees and can have large layouts: for hard lofts, the reasoning behind lower fees comes down to a lack of amenities. As these building were converted, the large amenity spaces required to house a pool, parking garage and gym, are non-existent. Some developers do build additions or make space for amenities, as is true for Tip Top Lofts, but it’s rare.
How To Know If Fees Are High?
The easiest way to find out is to ask an expert. A real estate agent can tell you which buildings are charging too much and which are too good to be true. However, if you’re keen to find out for yourself: Inquire about the reserve fund, compare the square footage of a unit you’re interested in against others in the neighbourhood, check what utilities are covered, examine the amenities offered, and ask a member of the condo board about the fees.
In most cases, there’s a justification for high fees; as the cost of utilities climb, your fees will go up as well. Likewise, if the reserve fund is depleted for a major repair, it’s necessary to build it up again. With that being said, if you feel a building is charging higher than average fees, you could be right. The average feet is around 70 cents per square foot in the GTA, so if fees are significantly higher and it’s not a luxury building, if might be best too look elsewhere.