One of the questions that always comes up when working with Buyers looking for a condo in Toronto is the question of condo maintenance fees. Combined with property taxes and your mortgage payments, they can add up to a hefty percentage of your total housing costs. So what’s the deal? What are condo fees and what do they cover? Here are a few things to consider about these fees when thinking of buying a condominium.
What is a Condo Maintenance Fee?
Condo maintenance fees are your percentage share of the costs to run the building as a whole – the bigger your condo, the higher your maintenance fees. While there are a few condominiums in Toronto that make everyone pay the same amount of maintenance fee regardless of size, most condo fees are based on the actual square footage of the unit. Other than your own actual unit, you also own a percentage of the hallways, the lobby, the gym, etc., known as the common elements. The fees go towards paying the operating costs of the common expenses and elements and generally include the following:
- Maintenance and repair of common property including lobby and hallways, landscaping, and the upkeep of fitness equipment and amenities.
- Operating costs including garbage removal, heat, electricity and water.
- Management and staff costs such as property management fees, concierge, security, etc.
- Contingency reserve fund is like a “rainy day” fund to deal with unexpected costs, repairs and replacements such as a new roof or repairs to heating or plumbing equipment. The minimal amount that must be contributed to the reserve fund is legislated by the government.
- Condo insurance – because you generally only own the space inside the drywall, your insurance only covers fire or damage to your own property. Part of the condo fee goes towards paying the bigger insurance that insures the common areas, the pipes and electrical behind the drywall and the overall building.
Why Condo Maintenance Fees Vary
Beyond the basics, there’s a wide variation in the features each individual condo building offers, and the fees vary accordingly. One building might offer beefed-up security, concierge service and underground parking, while another might have a fully equipped gym or pool with trainers and classes. There may also be access to special perks like a rooftop patio or guest suite. All of these are reflected in the monthly fee, and in some cases are optional. Generally these are the things to consider when comparing maintenance fees:
- As buildings age, the roof is replaced, the lobby and other areas need updating as things break down, therefore the older the building, the higher the condo fees.
- The more facilities and staff, the higher the condos fees.
- The smaller the building, the higher the condo fees. It comes down to basic math – if the costs are divided by 300 people instead of 30, everybody’s share of the costs goes down.
- The fees of condos that bundle utilities such as heat, hydro and air conditioning in individual units, tend to run higher than those that exclude those costs from the overall fee.
What are the average condo fees in downtown Toronto?
Although I’m asked this question by every condo buyer, there is no easy answer. There are factors, many mentioned above, that need to be considered so you’re comparing apples to apples. So things like the age of the building, amenities, whether all utilities are included in the fee, must all be considered. In real estate, we calculate and compare maintenance fees cost per square foot, and below is a good rule of thumb I follow when comparing condo fees.
- $0.50 – $0.60/sq.ft – well below average
- $0.60 – $0.70/sq.ft – average range
- $0.70 – $0.80/sq.ft – above average
- $0.80/sq.ft and up – Expensive and may affect resale value
What you should know before you buy
There are a few other factors to consider when it comes to maintenance fees that don’t necessarily fall into the categories above but ones that are very important to know or ask your agent about to get the whole picture and make the right decision.
- Another area to consider is a category known as special assessments. These are one-time fees for repairs not covered by the contingency fee, and can be substantial, especially with older buildings and conversions. Once this amount is paid off, the maintenance fee will drop accordingly.
- Condo maintenance fees are real dollars that are a big part of your monthly carrying costs. They’ll go up every year by a few percentage points, so make sure to budget for that.
- If you’re looking at buying a newly constructed building, expect fees to increase substantially in the first few years as the real costs of operating the building become known. Don’t be fooled by the advertised pre-construction pricing well below $0.50/sq.ft. Those fees are always “estimated”. There’s nothing to stop the developer from simply increasing the amount before interim occupancy.
- The maintenance fees for townhomes within a complex are typically slightly lower. Often townhouses have their utilities separately metered, so these are not included in the fee, but owners still pay a share for maintenance of common areas, security and other general costs.