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    Condo Cost Crunch: Navigating The Rise in GTA Maintenance Fees

    Why condo fees have surged, and its impact on your purchasing power and long-term investment

    Written By Robert Van Rhijn

    In recent years, condo maintenance fees in the Greater Toronto Area have been on the rise, sparking concerns among both homeowners and prospective buyers.

    Several factors contribute to this trend. These include increased operating expenses, high inflation rates, and the overall cost of maintaining condominiums. But we sat down with Strata realtor Sam Massoudi to explore its implications.

    But first, let's break down how condo fees are set.

    Determining Maintenance Fees

    While it might seem a condo corporation can simply charge whatever it wants for maintenance fees, The Condominium Act, a consumer protection legislation that regulates condo life in Ontario, is actually what regulates the prices.

    Massoudi shares that condo corps have declarations, bylaws, and rules that outline how maintenance fees are set, collected, and adjusted.

    But overall, they must determine maintenance fees based on several factors — such as inflation and anticipated expenses for the upcoming fiscal year. Additionally, contributions to the reserve fund, which covers unforeseen major repairs and maintenance, also play a role in determining monthly fees.

    Other things that influence the overall price are amenities, size of the unit, age of the building and location.

    Factors Contributing to Rising Maintenance Fees

    While it’s certainly frustrating when a building hikes your fees, as Massoudi points out, one of the primary reasons for the increase in maintenance fees is rising operating costs.

    Utilities, insurance, property management, and administrative expenses — all have been steadily climbing over the years. As a result, these expenses are typically passed on to homeowners through higher maintenance fees.

    Additionally, high inflation rates experienced in recent years have led to higher costs for goods and services, further impacting the overall cost of maintaining condominium buildings.

    According to recent data from 2022 to 2023, the average fees rose by 5.51 per cent across the GTA.

    But if it makes you feel better, it’s not just in the GTA that condo fees are soaring. Fees are going up across Canada.

    For example, Vancouver saw fees increase an average of 24 per cent between 2019 and 2021. Less drastic increases, but increases nonetheless, have also been seen in other major Canadian cities, like Calgary.

    Meanwhile, this trend is not just unique to condo owners.

    “As you can imagine, this is not particular to condominiums. Houses are facing the same issue. For instance, utility bills are much bigger these days. And repairs are more expensive as both labour and material costs have gone up substantially,” says Massoudi.

    Impact on Condo Owners and Affordability

    So does it matter that condo fees keep going up? Yes, it matters to your bottom line. But as for the real estate market, no it hasn’t mattered. In fact, the rise in maintenance fees has done little to no damage on the overall market or the investment potential of condos in the GTA.

    But as mentioned above, the rising cost does create more of a financial burden on condo owners.

    “Higher fees mean higher monthly expenses, which can stretch household budgets. On the other hand, for prospective condo buyers, higher maintenance fees increase the overall cost of owning a condominium which can directly contribute to a decrease in affordability,” explains Massoudi.

    And while maintenance fees aren’t normally a deal breaker — they can impact mortgage qualifications for buyers, as higher fees increase the monthly costs considered by lenders.

    Managing and Reducing Maintenance Fees

    Before you make an offer on a condo, it’s important to interrogate the fees to make sure they’re appropriately priced.

    Thus Massoudi explains that you, and your realtor, must dig deeper.

    “I look into individual condos that my clients are interested in and compare them to the neighbourhood average. If it’s much higher, I then research the reason behind that,” he explains.

    “Sometimes we find an issue and we assess the future impacts of it on their investment in the long run. In these cases, you usually see a lower price-per-square-foot, which can be attractive to some investors. But in many cases the higher-than-average fees can be a result of more amenities. Or because there are fewer units in the condo, like in a low-rise boutique building — both of which are actually very attractive to future buyers, too.”

    In addition, Massoudi warns that low maintenance fees aren’t necessarily a good thing.

    “The fees should cover all repairs, upkeep and renovations, while also maintaining a healthy reserve fund,” he says. “Otherwise the condo will face major issues later down the road.”

    As for having control over your maintenance fees, Massoudi suggests actively participating in condo meetings, reviewing financial statements and budgets, and raising concerns or regarding building management.

    So while rising maintenance fees in the GTA are a concern for condo owners and buyers, they are part of a broader trend affecting the real estate market.

    But working with a qualified realtor can help you understand the factors driving these increases. And in turn, help you take proactive steps to make sure you’re buying into a condo that is not only affordable, but also a great long-term investment.

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