What are maintenance fees really for?
It’s a familiar conversation: “I’m thinking of buying a condo,” you say. “But the maintenance fees!” everyone protests. But, as with gluten, many people can’t explain what maintenance fees are and why they’re so dead set against them. We spoke to Jen Heakes, sales representative at real estate brokerage Core Assets, a technology-driven real estate brokerage based in the financial district, to find out what condo maintenance fees are, what they’re not and why some are so much higher than others.
Where do maintenance fees go?
These fees typically cover building insurance and the building’s common elements, but this varies from condo to condo. The fees are typically dependent on the size of the unit, what utilities are included (heat, hydro, central air, etc), if there’s parking or a locker, what amenities the building has and, ultimately, how well the building is managed.
Wouldn’t somebody be better off buying a house, then, price notwithstanding, and keeping those fees for themselves?
There’s definitely a trade-off. Unlike in a house, condo expenses have an element of predictability. You’re paying a monthly fee, but there’s no need to mow a lawn, shovel snow, get a separate gym membership, replace your roof, etc. The extra monthly fee is the price you pay for the convenience of condo living. Buyers often view these fees as very black-and-white, staying away from buildings that don’t keep them in line with average (or less than average) fees. It’s a tough pill to swallow for most buyers if your maintenance fee is equal to or more than your mortgage payment.
Why are some maintenance fees so astronomical?
You can’t take a universal approach, since so many components affect them. A building with great amenities (concierge, gym, party room, pool) that is well managed and has more units can have lower maintenance fees than a building of the same age with great amenities that
is poorly managed and has fewer units to cover the cost of running the building.
How can fees be kept low?
Newer buildings tend to have lower maintenance fees to begin with, but this is not always the case by any means. New condo developments in Toronto are estimating maintenance fees of $0.54 per square foot (exclusive of parking and locker fees). Some of the lowest maintenance fees I’ve seen downtown are those in the Toy Factory Lofts. The building’s condo board took an in-depth look at the financials and were able to reduce unnecessary future costs.