Today, we’re going to dive into a topic that’s crucial for any condo buyer: condo maintenance fees.
If you’re new to the condo scene, you might be scratching your head about what these fees are and how they work. Not to worry, because in this blog post, I’ll be breaking down everything you need to know about maintenance fees. Whether you’re a seasoned condo investor, a long-time condo owner, or a first-time buyer contemplating the pros and cons of living in a condo, you’ll be in the loop on this important aspect of condo ownership.
If you’re considering buying a condo or apartment, you may be wondering how maintenance fees will impact your overall expenses. That’s why we’ll be discussing what the monthly maintenance fees include, including the different types of costs that are typically covered. We’ll cover building insurance, common area maintenance, reserve fund contributions, and utilities.
Finally, we’ll talk about whether maintenance fees have any impact on your mortgage amount. We’ll discuss how lenders take these fees into account when calculating how much you can afford to borrow, and what you should keep in mind when budgeting for your monthly expenses.
As a professional Toronto real estate agent, I will be sharing all my knowledge on condo maintenance fees in this blog so you know exactly what to be mindful of when shopping for a home in any condo building.
Let’s get started!
What Are The Maintenance Fees For Condos?
Condo maintenance fees are fees that condo owners pay each month to cover the costs of running and maintaining the building and its common areas.
These fees can cover a variety of costs, including building insurance, common area maintenance, reserve fund contributions, and utilities. The amount of fees can vary depending on a number of factors, such as the size of your unit and the age of the building. Typically, these fees are collected by the condo corporation and are used to cover ongoing expenses related to the maintenance and upkeep of the building.
How Are Condo Maintenance Fees Calculated?
Condo maintenance fees are calculated based on the costs associated with running and maintaining the building and its common areas. The costs can include things like building insurance, common area maintenance, reserve fund contributions, and utilities.
Typically, the total costs are divided among all the units in the building based on the percentage of the overall square footage that each unit occupies. This percentage is determined by the condo corporation and is typically based on the unit’s square footage relative to the total square footage of all units in the building. This includes parking spaces – in a parking garage or surface-level parking and condo storage lockers.
The maintenance fee you pay is based on every square foot you own in the building.
Once the total costs have been determined and divided among the units, each unit owner is then responsible for paying their portion of the fees. The fees are usually paid on a monthly basis and can vary depending on a number of factors, such as the size of the unit, the age of the building, and the types of amenities and services offered by the building.
Why Are Some Condo Maintenance Fees So High?
Some condo maintenance fees can be higher than others for a variety of reasons.
One of the main reasons is the age of the building. Older buildings may require more maintenance and experience major repairs, which can drive up the cost of maintaining the building and its common areas.
Another factor that can contribute to higher maintenance fees is the size of the building or the size of your condo unit. Larger buildings typically require more maintenance and repairs, and may also require more staff to manage and maintain the building. If you have a larger condo unit, you’ll also own more square footage within the condominium meaning your portion is higher. This can result in higher operating costs, which are reflected in the maintenance fees.
This isn’t always the case though.
For smaller, boutique condos, the monthly fees you pay may still be high, even if it’s not a big building. This is because these buildings still require a large amount of money to be properly maintained. However, if there are fewer units to divide the average condo maintenance fee cost, you’ll carry more of the burden.
In addition, the amenities and services offered by the building can also impact the cost of maintenance fees. Buildings that offer a range of amenities, such as swimming pools, gyms, and concierge services, may have higher operating costs, which can result in higher maintenance fees for unit owners.
Finally, it’s important to note that some buildings may have higher maintenance fees due to the presence of a reserve fund. A building’s reserve fund is a savings account that is set aside to cover unexpected repairs or major upgrades to the building. While having a reserve fund can be beneficial in the long run, it can also result in higher maintenance fees in the short term, as unit owners are required to contribute to the fund on a regular basis. But be mindful of special assessments which we’ll talk about later!
What Does The Monthly Maintenance Fees Include?
The monthly maintenance fees for a condo can include a variety of different costs associated with running and maintaining the building and its common areas. Some of the most common costs that are typically covered by maintenance fees include:
Building Insurance
Building insurance is a crucial component of the monthly maintenance fee for condos. This insurance is designed to protect the building and its common areas against damage or loss caused by a variety of events, such as fire, flooding, or severe weather.
The type of insurance coverage that is included in the monthly maintenance fees can vary depending on the building and the insurance policy that has been selected. In most cases, the insurance policy will cover the cost of repairing or replacing the building’s structure and common areas, as well as any equipment or fixtures that are owned by the condo corporation.
It’s important to note that while building insurance is typically covered by the monthly maintenance fees, individual unit owners are responsible for insuring the personal belongings of their unit and any improvements or upgrades that they have made to the unit. This is known as “unit insurance,” and it is separate from the building insurance that is included in the maintenance fees.
Common Area Maintenance
The cost of maintaining and repairing condominium common areas is typically included in the monthly maintenance fees. Common areas can include hallways, lobbies, elevators, parking areas, and other shared spaces within the building.
The cost of common area maintenance can vary depending on the size and complexity of the building and the services that are provided. For example, a building with a large lobby and extensive landscaping may require more maintenance such as lawn maintenance and snow removal than a smaller building with a simple entranceway.
Common area maintenance can include a variety of different tasks, such as cleaning, painting, landscaping, and repairing or replacing fixtures or equipment like swimming pool maintenance. It’s important to note that regular maintenance and upkeep of these areas is essential for preserving the value of the building and ensuring that it remains a desirable place to live.
In addition to regular maintenance, the cost of unexpected repairs or replacements may also be included in the common area maintenance fees. For example, if the building’s elevator breaks down or the roof needs to be repaired, the cost of these repairs would typically be covered by the condo corporation’s common area maintenance fund.
Reserve Fund Contribution
This contribution is an amount of money that is set aside each month to contribute to the building’s reserve fund. The reserve fund is used to cover unexpected repairs or major upgrades to the building that are not covered by the regular common area maintenance fund.
The reserve fund is an important financial tool for condo corporations, as it ensures that there is enough money available to cover unexpected expenses that may arise over time. These expenses could include major repairs to the building’s structure, such as replacing the roof or repairing the foundation, or upgrades to the building’s amenities, such as installing a new whirlpool or renovating the fitness center.
The amount of money that is set aside each month for the reserve fund contribution can vary depending on the size and complexity of the building, as well as the age of the building and the condition of its infrastructure and amenities. In general, the reserve fund contribution is calculated based on a long-term plan set out by the condo board that takes into account the expected lifespan of the building’s various components and the anticipated costs of repairs and upgrades over time.
Utilities
The monthly maintenance fees for condos may also include the cost of utilities. These utilities can include electricity, gas, water, and sewer, which are essential services for any residential building.
The cost of utilities can vary depending on a number of factors, such as the size of the building, the number of units in the building, and the efficiency of the building’s infrastructure. For example, a large building with many units may require more electricity and water than a smaller building with fewer units, and a building with older plumbing or electrical systems may be less efficient and therefore more expensive to maintain.
Property Management
Property management fees are another potential cost that may be included in a condo’s monthly maintenance fees. These fees cover the cost of hiring a property management company to manage and maintain the building on behalf of the condo corporation and its owners.
The decision to hire a property management company and include their fees in the monthly maintenance fees is typically made by the condo corporation’s board of directors or a similar governing body. This decision is based on a number of factors, including the size and complexity of the building, the availability of qualified staff or volunteers to manage the building, and the overall financial situation of the condo corporation.
While property management fees can add to the cost of owning a condo, they can also provide a range of valuable services that can help to ensure that the building is well-maintained and managed over the long-term. By entrusting the management of the building to a professional property management company, condo owners can benefit from their expertise and experience, and enjoy a high standard of living within the building.
What Factors Affect Condo Fees?
You may be asking yourself, “Why are some condo maintenance fees so high?”
Well, it’s because the monthly condo fee covers a lot.
As noted above, condo maintenance fees cover a wide range of services that benefit the condo owners as well as essential services such as building or condo insurance. Although it may not seem fun to be paying so much in a monthly expense on top of your monthly mortgage payment, condo fees are necessary.
Do Maintenance Fees Affect Mortgage Amount?
Yes, maintenance fees can affect the amount of mortgage that a potential buyer can qualify for. When a lender is determining how much money they are willing to lend a borrower, they take into account the borrower’s income, credit score, debt-to-income ratio, and other factors. One of the factors that lenders consider is the borrower’s monthly expenses, including the cost of the monthly maintenance fees.
In general, the higher the monthly maintenance fees, the lower the amount of mortgage a borrower may be able to qualify for. This is because the monthly maintenance fees are considered a fixed expense that the borrower will have to pay every month, in addition to their mortgage payment and other expenses. If the monthly maintenance fees are high, this can impact the borrower’s debt-to-income ratio, which is a measure of the borrower’s ability to repay the loan.
It’s important for potential condo buyers to consider the cost of the monthly maintenance fees when determining how much they can afford to borrow for a mortgage. By keeping the monthly maintenance fees in mind, potential buyers can make informed decisions about the type of condo they can afford, and ensure that they are able to manage their monthly expenses over the long-term.
Do Tenants Pay Condo Maintenance Fees?
In most cases, tenants do not pay condo maintenance fees directly to the condo corporation. The responsibility for paying the maintenance fees typically falls on the condo owner or landlord. However, the cost of the maintenance fees can be factored into the rental price that the tenant pays to their landlord or as an additional expense the tenant is responsible for which can be outlined on the lease.
This is why most people who are making the move from renting a condo to buying a condo are unaware of this additional fee.
As a Toronto leasing agent, I’ve never encountered a situation where the tenants was asked to pay the condo maintenance fee but it’s important for tenants to be aware of the cost of the monthly maintenance fees when they are looking for a rental unit in case the landlord may ask for them to pay.
Conclusion
In conclusion, condo maintenance fees can be a significant expense for condo owners and potential buyers, but they are an essential part of maintaining and improving the building over time. By understanding how maintenance fees are calculated, what they include, and what factors can affect them, condo owners and potential buyers can make informed decisions about their finances and their investment in the condo market.
If you’re considering buying or selling a condo, or if you’re interested in learning more about the condo market in Toronto, I’d be happy to help. As a real estate agent with years of experience working in the Mississauga, Etobicoke, and Toronto area, I have the knowledge and expertise to guide you through the process and help you make informed decisions about your investment.
So if you have any questions or would like to discuss your real estate needs, please don’t hesitate to get in touch with me. You can reach me through my website or by phone, and I’ll be happy to schedule a consultation with you. Thank you for reading, and I look forward to hearing from you soon.
