PREPARING FOR FUTURE CONDO MAINTENANCE COSTS
As a real estate agent, I chat with a lot of people about what they’re looking for in a home. One of the most common requests is that people don’t want to buy into a building that needs any maintenance. Unfortunately, that’s close to unavoidable! I’ll explain why, along with some more information.
WHO PAYS FOR CONDO MAINTENANCE?
You do! As an owner of your unit and the building it’s in, you have to pay your share of maintenance to upkeep your investment. Think about it, if you owned a house that needed a new hot water tank, you would have to buy a new one. It’s the same idea in condos, except multiple people are contributing towards the decision to buy a new tank and the cost.
These maintenance costs come in the form of Monthly Strata Fees (for ongoing maintenance) and Special Levies (for major repairs). No condo building in Vancouver has enough money in their Contingency Fund (which are funds set aside from monthly strata fees for building maintenance) to pay for large repairs, so expect special levies at some point while you own. All special levies are voted on by the owners (needing a 75% yes vote to proceed) so make sure you go the AGM meetings and keep yourself informed of what’s happening in your building.
Keep in mind, part of the buying process is researching the building to discover their past maintenance record and future repair plan so you have an idea of what you’re buying into.
“AVOIDING” CONDO MAINTENANCE COSTS
One of the only ways to avoid building maintenance costs is to buy in a new building – about 6 years old or younger. During this time period, all the systems will be new and some still under warranty, which means the building can avoid some repair costs.
Having said that, if something not under warranty breaks, owners will have to pay for it. I’ve also seen a lot of newer buildings levy owners for improvements to the building, like extra security, more furniture for the common room, and a “Contingency Fund Top Up” where the operating budget wasn’t planned properly (the initial operating budget is set by the Developer and often isn’t good enough) and the building needs extra funds to cover cost overruns. Keep
Another scenario where you might “avoid” building costs is if you buy into a building that just completed a major, high cost repair (I.e. full rain screen). At that point many owners aren’t eager to pay another special levy, so you might have a few years before seeing another big levy. One thing to remember is if you buy into a building that just completed a major repair, the seller will be asking a premium for the unit, so you end up paying for the repairs indirectly.
TYPES OF CONDO MAINTENANCE AND REPAIRS
Every condo in Vancouver will need regular maintenance and at some point, large repairs. Well built buildings are better positioned to age than something that was not constructed well, which helps mitigate future issues and potentially decrease costs.
Depending on how well the building is maintained, future repairs can be pushed to a later date with some minor fixes. For examples, a lot of buildings can postpone a full re-piping by installing a water conditioning system for a fraction of the cost. This won’t prevent the eventual re-piping, but it gives the owners some time to build up the funds necessary for the re-piping. Buildings with strong maintenance records, and knowledge of construction often fair better in the long run.
WHAT TO EXPECT WITH CONDO MAINTENANCE
A BC Strata Bylaw changed two years ago with the introduction of Depreciation Reports. These reports take stock of all the buildings components, how old they are, when they’ll need to be repaired and how much that’ll cost (all based on industry standards). The reports aren’t an exact science, but they’re incredibly helpful to owners and potential buyers when it comes to what to expect with regards to future maintenance.
The home inspection you’ll have done by a professional prior to buying will also give you an idea of how well the building is performing and what to expect in the future.
Contact us for any questions. If you’re looking to buy in the next few months, and aren’t yet working with a realtor – call us! There’s lots to know and it’s our job to ensure you’re educated.