Pre-sale Condo Strata Fees: What do they Actually Cover?
With rapid urbanization and a steep rise in the city-dwelling population, many are flocking to the chic condominium lifestyle, especially in Metro Vancouver.
Condos offer modern living with the comfort of on-site amenities and enhanced security.
But these features come at a cost and most condo owners are happy to pay that price to get rid of the stress of building maintenance and security.
Condo owners enjoy amenities like fitness centres, party lounges and pools at their doorstep.
But there are costs associated with these amenities.
If this is your first time venturing into the presale condo market, you may be new to strata fees.
As strata fees are subject to the kind of amenities and luxuries you have available in the building, it is important to know what they are and where your money is going.
Let us look into what strata fees are and how they are important to you as a homeowner.
What do Strata Fees include for Pre-Sale Condos?
This is a monthly fee that is paid to the building’s Strata Corporation for the upkeep and development of the building.
These costs are usually calculated by taking the total cost of strata’s expenses and dividing it by the unit entitlement of your strata lot.
For example, if the total expenses to maintain a building of 5 units is $5,000 and following is the breakdown of the unit floor area:
- Unit 1: 500 sq ft (10% of total available area)
- Unit 2: 500 sq ft (10% of total available area)
- Unit 3: 1,000 sq ft (20% of total available area)
- Unit 4: 1,000 sq ft (20% of total available area)
- Unit 5: 2,000 sq ft (40% of total available area)
Total floor area available in the building = 5,000 sq ft.
Now let’s say you want to buy the unit #3, which has a floor area of 1000 sq ft. – which is 20% of the total floor area available. Then in this case your strata fees would be 20% (your unit’s entitlement) of the total strata expenses:
20% of $5,000 = $1,000 (in strata fees)
As we can see from the above example, the larger the square footage of your unit, the more you will have to pay in strata fees.
Strata fee is usually divided into 2 main parts:
- Operating Fund
- Contingency Reserve Fund (CRF)
Both these fees are mandatory for all strata corporations in British Columbia.
Operating Fund covers day-to-day expenses such as property management fees, building insurance, gardening and landscaping, garbage collection and general upkeep.
Contingency Reserve Fund covers more infrequent expenses, which can include repairs and upgrades to the common areas, adding amenities or elevators, or other one-time developments.
These strata fees can vary considerably based on how luxurious the amenities are in the building.
How much is the average Strata Fee?
Since the strata fees depend on the amenities in the building, they can vary quite a lot based on the different offerings like pools, rooftop patios, gym, entertainment areas, etc.
Location can also have a significant effect on the strata fees.
Another variable that plays an important part in Strata fees is Insurance. Rising insurance premiums have caused the strata fees to skyrocket here in British Columbia.
For instance, just this year (2021) the insurance premiums in British Columbia went up almost 27% affecting the strata fees all around the province.
In 2021, on average, condo strata fees in Metro Vancouver for presale projects were around $0.45 to $0.45 / square foot.
Questions to Ask your Realtor
Question #1: What is the developer’s estimated budget for the presale condo project?
For each presale project, developers create an estimated overall budget so you do have an idea of what your strata fees might be.
It is very important to work with an experienced realtor, lawyer, accountant and property manager to get a second opinion on the overall budget.
Question #2: How are my strata fees being allocated?
You should also check how much money is being contributed to the reserve fund each year, and is it enough to cover unanticipated expenses?
This can be very important as some one-time developments can be very expensive and adversely affect the strata fees.
Experienced realtors and supporting team at ipresalecondos.com sit with you and go through every detail of your presale contract so you know exactly how the fees you pay to the strata are being used.
Question #3: What utilities are included in my Strata Fees?
Do your fees include utilities such as hot water, heat and gas? Utilities might seem like a small expense but they can quickly add up. Checking if your strata fees include these utilities helps you plan your budget accordingly.
In a nutshell, due diligence is required from the buyers side to make sure they know the ins and outs of their strata fees.
Final Thoughts
When budgeting for your next condominium purchase, strata fees are not something to overlook.
They benefit you, as a homeowner, by removing the stress of upkeep and providing many sought-after amenities that would otherwise cost a lot in a single-family home.
But do keep in mind that the more luxurious your building, the higher you would have to pay for strata costs.
At ipresalecondos.com Our goal is to provide you with an enjoyable and seamless experience.
To that end, we’re constantly working on improving accessibility to latest presale projects in the city of Surrey, Vancouver, Burnaby, Richmond, port coquitlam , New westminster and rest of the lower mainland.
We have a dedicated team of realtors, lawyers, notaries and even in-house property managers that guide you throughout the presale buying process. ipresalecondos.com members enjoy exclusive access to brand new listings and front-of-the-line access to the top presale projects in town.
With a team like ours, you would not have to worry about the high strata fees surprising you, because we empower you with information so you can make wise buying decisions!
