The name of the fee – strata, maintenance or HOA – varies on your location, but the fees apartment and condo owners pay every month all serve the same purpose: to keep the building operating smoothly.
As a general rule, strata or HOA fees in high rise condos and apartments tend to be higher than fees in low rise buildings.
Downtown tends be more expensive than the suburbs
Fees also tend to be higher in downtown buildings, usually because they have more amenities. In Vancouver, Canada, strata fees average 0.40¢ cents per square foot in downtown high rises, and 0.35¢ cents in suburban high rises. However, this is changing, with new suburban high rises offering amenities on par with their downtown peers.
Keep in mind, in a mild west coast climate like Vancouver or Seattle, strata or maintenance fees usually don’t include heating or cooling. In cities with colder winters and warmer summers, like Toronto or New York, strata fees average around 0.59¢ cents a square foot, almost 0.20¢ cents higher than Vancouver or Seattle.
Don’t be fooled by low fees in new buildings
Brand new condos often have lower strata or HOA fees — at the beginning — but they tend to increase substantially in the first three years. Don’t be fooled — the strata fees are set by the developer before the building even breaks ground. There is an incentive for the developer to advertise low strata fees in order to entice potential buyers in the pre-construction phase. Once the building is built and occupied, the true costs of operating the building come to light.
As if all of this wasn’t confusing enough, fees in existing buildings can also be too low — meaning not enough money is being put aside for unexpected or emergency repairs, which can come back to bite owners later in the form of special assessments and levies.
Review all documents
In a well-run, well-managed building with a proactive council, there shouldn’t be too many financial surprises. Your realtor or real estate agent should be able to provide you with the building’s financial statements and council minutes, going back several years. Make sure to review these documents carefully, making note of any issues.
If the building is several years old, make sure there is a healthy contingency fund. In some jurisdictions, such as British Columbia, Canada, councils are mandated to set aside 25 per cent of their annual operating budget to deal with both regular and unforeseen maintenance and repairs.