Are you in the market for a new home but are worried about condo maintenance fees and how they affect the value of your home? You’re not alone in your worries and concerns. There is a point (financially) at which maintenance fees adversely affect the value of a condo.
A recent publication in the Toronto Star highlighted the growing concern and misinformation that exists in the marketplace. The average maintenance fee for buildings in the G.T.A. is currently $0.59 per square foot. These fees can range from approximately $0.30psf to over $1.00psf, depending on the building, amenities, management, age and a few other factors. Other issues that are often overlooked are the maintenance fees associated with parking and locker. Condo owners pay monthly maintenance fees on these two items and the fees, per month, for a parking space can range from $43 to $150+ per month. Fees for lockers can range from $8 – $20+ per month. The myth that older buildings, by default, have higher maintenance fees was also debunked as the research showed that condo buildings completed between 1975-1980 have maintenance fees averaging $0.57psf.
Most Buyers should carefully consider the impact of buying an 800 – 2000sf unit and not opting to purchase a parking space because of the additional $40 – $150/mth in maintenance fees they are trying to save. The impact of not having a parking space would definitely out-weight the cost of paying maintenance on a parking spot for the 3-10 years you live in the unit. Consider the position of a Buyer, viewing a 1500sf unit that does not have parking. We believe that paying the $50/mth in maintenance fees over a 5 year period (approximately $3000) would be advantageous in comparison to the prospect of trying to sell a unit of that size without a parking space. In our opinion, you’d likely lose a lot more than $3000 on the sale of a suite of that size without parking. We’d say ‘suck it up’ and pay the fee on parking. You’ll make it back on the sale.
To contrast that last point, buying a 450sf unit and adding the cost of parking (both to purchase and to maintain per month in fees) may not result in the financial gain on the sale to justify the initial purchase. Many buyers considering units of this size will not have a car, nor can they afford to keep one when living downtown Toronto. Buying a parking spot in this situation may not be the best course of action.
Interestingly, condo buildings that have a pool, gym and concierge have maintenance fees averaging 31% more than buildings without. Something you should carefully consider when buying. We all love a fancy gym and pool, but really question how much you’ll use them. If you will, make the plunge and pay the premium. If you won’t, take it into consideration.
Those of you considering older buildings where heat, hydro and water are included in your fees should note that 40-50% of your maintenance fees are consumed by these items. Newer buildings have individually metered heat and cooling systems that allow unit owners to pay for the hydro and water they consume. In theory, this should keep the fees for the building lower as people are more conscious of having to pay for what they consume. When the maintenance fees cover the cost of hydro, we find that owners and tenants leave their heat and air conditioning running when they aren’t home or when it isn’t really needed.
How do we keep maintenance fees in check? What can you do to make a difference? Get involved! Volunteer for a position on your condo corporation. Attend the AGM and other meetings. Read and scrutinize the actions of your board. Ultimately, you’re working together to maintain a healthy reserve fund and fund the maintenance of the building systems. Encourage owners to take pride in the building and turn off lights, heat and air conditioning when not in use. These simple steps can lower fees and keep the values of condos in your building climbing in an upward direction.