Maintenance fees across condos in the GTA averaged 65 cents per square foot in 2017, according to a recent report from Condos.ca. This marks an increase in average maintenance fees per square foot of 2.52 per cent from 2016 and of 3.79 per cent from 2016 to 2015, which is the last time the website reported the statistic.
Condos.ca plans to start reporting on average maintenance fees per square foot across condos in the GTA annually going forward, said partner and VP of sales Andrew Harrild. He said their goal is to promote transparency and understanding of the sometimes misunderstood monthly payment required of condo owners to help fund their building’s ongoing operations and maintenance.
“We wanted to remove some of the fear that surrounds maintenance fees,” he said. “When they’re done right, they can be an important component of ensuring the long-term viability of your investment.”
To that end, Condos.ca’s latest report on maintenance fees tackles some of the myths surrounding the monthly payments.
The report encourages prospective condo buyers to look to sound building management as a sign of value as opposed to low fees. That’s because prospective condo buyers drawn to a building by low fees can get shocked with special assessments if those monthly payments fail to cover the building’s actual operating and maintenance costs and leave the condo corporation’s reserve short of the funds to pay for big-ticket repairs as they arise.
Just as condo corporations may be tempted to artificially depress maintenance fees to boost the marketability of their building, so may be developers. The report acknowledges that it’s common for maintenance fees to rise in new buildings in their first three to five years, although it adds fees should level off afterwards. Fees generally trend upward in lockstep with inflation, but fees can decrease in well-managed buildings, the report found, highlighting a 30-per-cent drop at Toy Factory Lofts.
Maintenance fees can range dramatically between buildings. The lowest rate in the GTA in 2017 rang in at 22 cents per cent per square foot, according to the report. That’s more than a dollar less per square foot than the highest rate in the GTA in 2017, which was $1.35 per square foot.
The report cites building size and number of units, along with amenities, as some of the most significant factors in determining maintenance fees levels. Contrary to misconception, it says, maintenance fees are not necessarily lower in small boutique buildings than high-rise towers. All else equal, in smaller buildings, there are fewer units to spread costs across, but the report adds that while larger buildings may have a greater number of units to spread costs across, larger buildings may also see increased wear and tear from higher foot traffic.
Fee levels may also vary between buildings depending on what is and isn’t included in the monthly payments, the report points out. In buildings where utilities were included in the monthly payments, maintenance fees averaged 69 cents per square foot in the GTA in 2017. That is almost double the average of 37 cents per square foot in buildings where utilities were not included in the monthly payments. But, the report says, owners have to pay utilities regardless of whether they’re accounted for in maintenance fees, so low fees are not synonymous with low costs.
The report adds that maintenance fees for certain amenities, such as lockers and parking, are typically charged separately. It found that parking fees averaged $46.22 per month and locker fees averaged $15.15 per month in condos across the GTA in 2017.
Harrild recognized that some condo communities are willing to pay higher fees for the luxury of valet service, as an example. For other condo communities, he suggested above-average fees could serve as a wake-up call.
“If you’re in a building where you’ve just taken it for granted that your maintenance fees are higher than what we’ve determined to be an average, then perhaps it’s time to reach out to other condo boards in the area, other people in different buildings, to find out what they’re doing,” said Harrild.