How Much Can Condo Fees Increase in Ontario?

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Condo living offers an affordable entry into Toronto’s housing market, along with a maintenance-free lifestyle. However, when condo fees rise, affordability can quickly become a concern. Many owners start to wonder if they can still manage the costs, leading to the key question: How much can condo fees increase in Ontario?

This article will help you understand the basics of condo fees, how these fees and increases are managed and some tips to help you assess condo fees.

 

What Are Condo Fees?

Condominium fees, or condo fees for short, are what condo owners pay to cover the costs of operating and maintaining the building and its shared spaces. It is paid to the condo association on the first day of each month and typically covers expenses such as building repairs, utilities, service contracts, amenities, insurance, and reserve fund contributions.

When purchasing a condo, buyers are joining a collective of owners that work together as a corporation to take care of the building. Condo owners equally share the costs of caring for and maintaining their building; condo fees represent each owner’s share of these costs.

What Do Condo Fees Cover?

We mentioned earlier that condo fees cover the costs of caring for and maintaining a condominium. In this section, we’ll dig a little deeper into what that means. 

Condo fees cover a wide range of expenses to keep the building running smoothly and in good condition. These include both day-to-day costs and planning for future maintenance. Every condominium is different, and condo fees are tailored to the property they support.

In general, here’s what’s typically included in condo fees:

• Utilities: This covers electricity, water, heating, and cooling for common areas like lobbies, hallways, and outdoor spaces. Some buildings may include some unit utilities in the fees as well, such as water.
• Building maintenance and repairs: Regular cleaning, landscaping, and general upkeep, as well as minor repairs to things like common area windows, doors, or fixtures.
• Amenities upkeep: If your building has amenities like a gym, pool, or party room, fees go toward their maintenance, including cleaning, repairs, and upgrades.
• Insurance: Condo fees include building insurance, which protects against damage to shared spaces is required by law. This is different from condo insurance for your specific unit. It protects the units and the corporation, not your personal property or betterments and improvements, against risk and liability.
• Security services: Whether it’s a staffed front desk, security guards, or key fob systems, condo fees fund shared security measures.
• Contract services and Staff wages: This can include property management fees, janitors, maintenance workers, and anyone else employed to keep the building running smoothly.
• Reserve fund contributions: A portion of your fees is set aside in a reserve fund for major repairs or renovations, like replacing the roof, fixing the elevator, or updating common areas. Reserve funds are required by law as well.

How Are Condo Fees Calculated?

In Ontario, condo fees are based on what the building needs to run smoothly, stay in good condition, and meet the legal requirements. The fees are shared among all the unit owners, with each owner paying their share based on the percentage ownership which can be found in Schedule D of the corporation’s declaration. Generally, the percentage ownership is based on the size of your unit.

Here’s how condo fees are typically calculated:

1. Operating budget: The condo board creates a yearly budget that covers things like utilities, cleaning, repairs, and staff wages. This ensures the building runs well throughout the year.
2. Reserve fund: Ontario law requires condos to have a reserve fund for major repairs, like replacing a roof or fixing elevators. A study is done every three years to figure out how much money needs to be set aside for these future costs.
3. Proportional ownership: Owners pay fees based on Schedule D of the corporation’s declaration. Generally, larger units pay more because they represent a bigger share of the building
4. Inflation and unexpected costs: Sometimes fees need to be adjusted for rising costs like utilities, inflation or unplanned repairs. This ensures the condo always has enough money to cover its needs.

Who decides how much a building’s condo fees will be? Condo fees are determined by a condominium corporation’s board members. Typically, the board works with their property management team to create an annual budget that will maintain the building in good order, address upcoming needs and repairs, and is fair for all owners.

Condo Fee Increases: Why, How Often, and How Much?

When buying a condo, it’s best to assume that condo fees will increase at some point. Inflation, increased utility costs, labour wages, and unexpected repairs all play a role in the cost of operating and maintaining a condo building and property.

In Ontario, as of 2024, there are no limits on how much a condo corporation can increase condo fees. Unfortunately, this sometimes leads to significant fee increases. However, it’s more common for condo boards to raise in small increments over several years.

Why Do Condo Fees Increase? 

Condo fees may increase for several reasons. Rising utility costs, such as electricity or water, often contribute to higher fees. Inflation also plays a role, as the cost of services like maintenance and security tend to go up over time. 

Additionally, unexpected repairs or the need to boost the reserve fund for future repairs and maintenance can lead to fee hikes. A condo board adjusts fees to ensure there are enough funds to keep the building running smoothly and in good condition and to avoid any future special assessments. How Often Can Condo Fees Increase? Condo fees can be adjusted annually when the condo board reviews and approves the operating budget. Typically, increases are introduced at the start of a corporation’s fiscal year, which is dependent on the corporation’s governance structure, its original registration dates, and other factors.

How Much Can a Board Raise Condo Fees?

There’s no cap on how much a condo board can raise fees, but they are required to act in the best interest of all owners, so sharp increases are rare in mature, well-managed buildings. 

A recent article shows that condo fee increases in Ontario have been:

• 2.98% in 2021
• 2.72% in 2022
• 5.51% in 2023

The average condo fee in Ontario is now around 86 cents per square foot, reflecting the rising costs of maintaining buildings and shared services. When buying a condo, it’s best to plan for annual condo fee increases between 2% – 5%.

Tips for Assessing Condo Fees: Too High or Too Low?

When buying a condo or reviewing fee increases, it’s important to recognize potential signs that condo fees might be too high or too low. If you’re considering a condo whose fees are much lower than comparable properties, it could be a sign of poor management or bad governance rather than a good deal.

Here are some tips to help you evaluate:

• Too high: If your fees are significantly higher than similar condos in your area, this could signal something isn’t right, such as inefficient management, unnecessary expenses, or overspending on amenities.
  Also, take a look whether suite utilities are included in your condo fees which could unfairly skew comparables with other buildings.
• Too low/no increases for years: If fees seem unusually low, this could indicate underfunding of the operations and maintenance of the building. It also may indicate the reserve fund isn’t being adequately cared for, which may lead to hefty special assessments for major repairs in the future.

Expert Property Management for Stable Fees and Peace of Mind

While individual owners may not control condo management decisions, knowing that a respected company like ICC Property Management is overseeing your building can provide reassurance. 

A well-managed property helps ensure that fees are fair, maintenance is consistent, and your investment is protected. 

With ICC, you can trust that your condo is in capable hands, allowing you to enjoy the benefits of condo living without unnecessary worry.

Visit our website to learn more about our services.