Strata Fees in British Columbia
Updated by Mike Stewart Realtor on December 12, 2023
Strata living in condos and townhouses is a popular choice among many British Columbians which offers a blend of community living with shared responsibilities.
One of the primary shared responsibilities is the payment of a monthly strata fee.
But what exactly are these fees, and how are they regulated?
What Are Strata Fees?
At their core, strata fees are contributions made by each unit owner within a strata corporation.
They are also often referred to as maintenance fees or condo fees in BC.
These funds are pooled together to manage and maintain the shared aspects of the strata community.
From landscaping to building repairs, from strata insurance premiums to utility bills, these fees ensure that the communal living environment is preserved and enhanced.
These maintenance fees do not cover the cost of repairs and maintenance within individual suites.
These costs are covered by the strata owners or tenants.
The Role of the Strata Property Act
The Strata Property Act of British Columbia serves as the guiding document for all things related to strata living.
It outlines the rights and responsibilities of both the strata corporations and the individual owners.
When it comes to strata fees, the Act provides clear directives on how these fees should be calculated, collected, and utilized.
How Are Strata Fees Calculated?
The process of calculating strata fees is methodical and transparent.
Every fiscal year, the strata corporation is required to draft a budget.
This budget is a forecast of all the anticipated expenses for the upcoming year.
Once the budget is finalized and approved during the Annual General Meeting AGM, the next step is to determine each owner’s contribution.
The unit entitlement method is the standard approach.
Here, the total budgeted amount is divided based on the size or value of each strata lot or strata unit and this is based on the unit entitlement.
So, a larger unit would naturally have a higher strata fee than a smaller one.
This method ensures that every owner contributes their fair share to revenues of the strata.
The unit entitlement of a unit in a strata can typically found on the strata plan of the development.
When Are Condo Fees Payable?
Typically, these condo fee payments are monthly and most home owners set up direct deposit to pay the fees to the management company that the strata council has hired to manage the building.
Average Strata Fees BC
Average strata fees BC and across Metro Vancouver in 2024 have been rising along with inflation and in many cases faster.
Strata maintenance fees have been increasing (among other reasons – see above) faster than inflation due to the recent requirement of strata’s to prepare depreciation reports ever 5 years.
In my experience as a Vancouver Realtor since 2005, average condo fees across BC and Greater Vancouver vary dramatically based on location.
Maintenance fees tend to be higher in more dense areas of Vancouver than they are in less dense areas due to the high cost of labour and getting materials into the busy city.
I have seen maintenance fees as low as less than $0.20 per square foot per month for very simple existing townhouse developments with no shared amenity other than landscaping.
On the high side I have seen strata fees high as over $1 per square foot for new Downtown Vancouver presale condos with a high level of amenity such as a pool or full time concierge.
That said there is a huge variation in strata fees in Vancouver and across British Columbia.
This is due mainly to the extreme level of variation in condos in terms of climate, building age, type of construction, location, levels of maintenance, quality of construction, and proximity to labour available to maintain buildings.
How Much Can Strata Fees Increase in BC?
There is no limit to how high strata fees can go in BC.
Strata fees can increase as high as strata’s and their councils feel they need to meet their goals.
Strata fees for all complexes in BC have recently been increasing due to the effects of inflation on the strata’s costs.
Strata fees also go up as buildings age as they require more maintenance and therefore more money to have the buildings perform as designed as they age.
Typically newer buildings will have lower strata fees as their major mechanical systems will require less maintenance and repairs.
Most of the major mechanical and other systems like roofs, siding, flooring, etc typically have a 25 year life span in BC.
After 25 years, (give or take 5 or 10 years) it is reasonable to expect the systems and components of a strata’s building will have to be replaced or require major repairs.
All of this requires money which will have to be paid for by the strata lot owners.
What Is Included in Strata Fees in BC?
Maintenance fees, often referred to as strata fees, are essential for the upkeep and management of strata properties in British Columbia. This common expense is paid for with the strata fees paid by the strata lot owners.
These monthly maintenance fees primarily cover the following:
1. Maintenance and Repairs
A significant portion of maintenance fees goes toward keeping common areas, such as hallways, roofs, and landscaping, in top condition. This includes both routine maintenance and unexpected repairs to ensure the property remains well-maintained.
2. Insurance
Maintenance fees typically include strata insurance coverage for common property and assets, safeguarding against risks like fire, water damage, and liability.
3. Management Fees
Part of the fees is allocated to professional property management services, handling financial administration, meeting coordination, and more.
4. Contingency Fund
Maintenance fees contribute to a contingency reserve fund or reserve fund, providing a financial cushion for future repairs, upgrades, or unforeseen expenses. The CRF contribution can rise or fall depending on what is required.
5. Common Area Utilities
In addition to the above, maintenance fees may also cover utilities for common areas, including gas, hot water, and electricity. These utilities ensure that shared spaces are adequately lit, heated, and maintained for the benefit of all residents.
While these are the core components, it’s vital to review your strata’s documents and financial statements to understand precisely what is covered in your maintenance fees.
Remember that the composition of these fees can differ between strata properties, depending on the services and amenities offered and the financial stability of the strata corporation.
The Dual Fund System: Operating & Contingency Reserve Fund
The Strata Property Act mandates the maintenance of two distinct funds:
1. Operating Fund
The Operating Fund is essentially the strata corporation’s checking account.
It’s the primary financial reservoir from which the day-to-day expenses of the strata are met and is overseen by the property manager.
Purpose
- Regular Maintenance: This includes routine tasks like cleaning common areas, gardening, and minor repairs.
- Recurring Expenses: Monthly or annual bills such as utilities (water, electricity, garbage collection), security services, and property management fees are paid from this fund.
- Administrative Costs: This covers expenses related to the management of the strata, such as office supplies, communication costs (like newsletters or website maintenance), and any fees associated with legal or professional consultations.
Funding
Owners contribute to the Operating Fund through regular strata fees.
The amount is determined based on the annual budget, which forecasts the expected expenses for the upcoming year.
Management
The strata council is responsible for ensuring that the Operating Fund is used appropriately and that there are sufficient funds to cover the anticipated expenses.
Any surplus at the end of the fiscal year can be carried forward to the next year or transferred to the CRF.
2. Contingency Reserve Fund (CRF)
The CRF can be likened to a savings account or an emergency fund for the strata corporation. It’s set aside to cover significant, infrequent, or unexpected expenses.
Purpose
- Major Repairs and Renovations – This includes projects like roof replacement, repainting the exterior, or upgrading the elevator system.
- Unexpected Repairs – In case of unforeseen damages, like those caused by natural disasters (e.g., floods, earthquakes) or accidents (e.g., fires), the CRF can be tapped.
- Future Projects – The CRF can also be used for planned future upgrades or additions to the property, enhancing its value and appeal.
Funding
The CRF is primarily funded by transferring a portion of the strata fees from the Operating Fund.
Additionally, any surplus from the Operating Fund at the end of the year can be moved to the CRF.
Special levies can also contribute to this fund, especially if a significant expense was not anticipated.
As of November 1, 2023, Strata Corporations in BC are required to forward a minimum of 10% of their annual operating fund to the CRF.
Management
The use of the CRF typically requires approval from the strata owners, especially for significant expenses.
This ensures transparency and agreement on how the funds are utilized.
Regular assessments are conducted to determine the health of the CRF and whether contributions need to be adjusted.
Special Levies or Special Assessments
While regular strata fees can cover anticipated expenses, unforeseen costs can arise.
For such unexpected expenses, strata corporations can impose a special levy or special assessment.
Special assessments can also be used by strata councils who want to keep the monthly fee low to fund anticipated costs for work and maintenance on the building.
The imposition of a special levy is not arbitrary as a 3/4 vote in favor is required, ensuring that the majority of owners agree on the necessity of the additional funds.
This requirement of a 3/4 majority at an AGM for special assessments can often make raising money for building maintenance challenging.
This is especially true in buildings with few owner occupiers or a strata council unable to convince strata lot owners of the necessity of the work or maintenance to be performed.
Price Misconceptions in Strata Property Purchases
When considering the purchase of a strata property in British Columbia, it is not always the case that older properties will be less expensive or that newer properties will be pricier. The common assumption that property prices depend on age can be misleading because other factors also play a significant role.
Initial Costs and Long-Term Investments in Older Properties
Starting with older strata complexes, they might list units at lower initial prices compared to newer complexes. However, when investing in an older building, one should anticipate additional costs for maintenance and repairs to keep the property functioning properly.
Understanding Maintenance Costs Through Due Diligence
Prospective buyers can estimate these expenses by meticulously reviewing the property’s historical and projected maintenance records, such as Depreciation Reports, which forecast future costs; Engineering Reports, assessing the property’s structural health; Envelope Studies, evaluating the building’s exterior; and Annual General Meeting (AGM) minutes that provide a record of past issues and solutions. This due diligence, coupled with a home inspection by a certified inspector, helps in understanding the financial commitment required after purchase.
Challenges in Selling During Repair Phases
It should also be noted that during periods when an older building is undergoing repairs, selling units at premium prices can be challenging due to buyers’ concerns about the building’s condition. Additionally, the costs for upkeep of a strata property, especially those over two decades old, can be substantial. As a building crosses the 25-year mark, the financial burden for maintaining, repairing, and updating major systems can climb into the hundreds of thousands or even millions of dollars annually.
Financial Implications of Maintenance in Older Strata Properties
These maintenance costs are typically covered by either regular maintenance fees or special assessments levied on the owners. A lower monthly maintenance fee may often indicate a higher likelihood of future special assessments—lump-sum charges for significant repairs or upgrades. Conversely, higher maintenance fees might suggest a well-funded reserve reducing the need for special assessments.
Funding Repairs: Maintenance Fees vs. Special Assessments
In contrast, newer strata buildings may have higher asking prices for units, but they potentially offer savings in the long term. New constructions usually incorporate modern, more resilient systems that require less frequent repairs and replacements, and these may still be under warranty. The reduced need for repairs not only lowers ongoing costs but also can enhance the property’s appeal in the market, facilitating easier sales and possibly higher resale values.
Cost Benefits of Newer Strata Properties
Understanding these factors can guide buyers in making an informed decision that balances the initial purchase price with the long-term cost of ownership in the context of strata properties.
Budgeting
A well-planned budget is the backbone of a financially healthy strata corporation and this is overseen and controlled by the strata council with the help of the building management company.
Proper budgeting ensures that the strata has sufficient funds to cover its expenses, both anticipated and unexpected.
The Strata Property Act underscores the importance of transparency in this process.
Every owner has the right to understand the financial decisions made by the strata council, ensuring accountability.
Understanding Your Strata Fee Breakdown
Strata fees often cover a range of services and amenities. Some services, like cable or gym memberships, might be optional. Knowing these can help owners opt-out and save.
Evaluating Special Levies
Necessity of Levies: Understand why a special levy is being proposed. Is it for essential repairs, or for aesthetic upgrades?
Planning for Levies: Consider setting aside a small amount regularly in anticipation of potential special levies.
Strata Insurance Implications
Overlap and Gaps
Ensure there’s no overlap between the strata’s insurance and individual strata lot owner’s insurance. Conversely, ensure there are no coverage gaps. A good strata management company and an insurance broker should be able to help the individual strata owner with this.
Insurance Costs & Premium Factors
Its important to understand the factors that might increase insurance premiums and insurance costs, such as claims history or building features. A poorly maintained or older building may have to pay higher insurance rates than an older building or a poorly maintained one.
Comparing Strata Fees
Amenities vs. Fees:
A higher strata fee might be justified if it includes access to high-end amenities like a pool, gym, or 24-hour security.
Age and Condition
Older buildings might have higher maintenance costs, impacting fees. Conversely, newer buildings might have higher fees due to premium amenities.
Understanding Depreciation Reports
Future Costs: These reports predict future repair and maintenance needs. Understand potential costs over the next 10-30 years.
Red Flags: Look for indications of major upcoming expenses, or a history of deferred maintenance.
Advocating for Transparency
Clear Communication: Owners should expect and demand clear, regular communication from the strata council about financial matters.
Regular Reporting: Encourage the strata council to provide regular financial updates, including budget forecasts and expenditure breakdowns.
Planning for the Future
Long-term Sustainability: Encourage the strata to think long-term. This includes setting aside adequate funds in the CRF and planning for future maintenance and repair needs.
Financial Health: Regularly review the strata’s financial health. This includes assessing the adequacy of strata fees, the health of the CRF, and the potential for future special levies.
Unpaid Strata Fees Under the Strata Property Act
The Strata Property Act of British Columbia provides a clear framework for the management and operation of strata corporations, and this includes provisions related to unpaid strata fees. Strata fees are essential for the smooth functioning of a strata corporation, funding communal services, amenities, and maintenance. When an owner fails to pay these fees, it can have significant implications for both the individual and the strata corporation.
- Late Payment Interest:
- If an owner does not pay the strata fees by the due date, the strata corporation can charge interest on the unpaid fees. The rate of interest and the date from which it’s charged should be set out in the bylaws of the strata corporation.
- Lien Against the Strata Lot:
- The Strata Property Act allows the strata corporation to register a lien against the strata lot of an owner who has not paid their strata fees. This lien can also cover interest, fines, legal costs, and other related charges.
- Once registered, this lien has the same effect as a judgment of the Supreme Court in favor of the strata corporation for the recovery of a debt.
- Legal Action:
- If the unpaid fees continue to accumulate, the strata corporation can take legal action to sell the owner’s strata lot. This is a significant step and is usually a last resort.
- Before the strata corporation can proceed with the forced sale, they must obtain a court order. The court will consider various factors, including the amount owed and any attempts made to collect the debt, before granting such an order.
- Implications for the Owner:
- Beyond the financial implications of accumulating interest and potential legal costs, an owner with unpaid strata fees might lose their voting rights in general meetings, depending on the bylaws of the strata corporation.
- The registered lien can also impact the owner’s ability to sell or refinance their strata lot.
- Implications for the Strata Corporation:
- Unpaid strata fees can strain the finances of a strata corporation, especially if multiple owners default or if the unpaid amounts are significant. This can lead to cash flow issues, impacting the strata’s ability to fund essential services and maintenance.
- The strata corporation might need to adjust its budget, increase strata fees, or levy special assessments to cover the shortfall.
- Prevention and Resolution:
- Clear communication is crucial. Strata councils should ensure that all owners understand the importance of strata fees, the due dates, and the potential consequences of non-payment.
- If an owner is facing financial difficulties, it’s beneficial for both parties to discuss potential payment plans or temporary solutions to prevent the situation from escalating.
Maintenance Fee Questions to Ask Before Buying
- Strata Fee History – Inquire about the frequency and percentage of strata fee increases over the past five years. This gives an indication of the financial stability of the strata.
- Upcoming Repairs – Ask about any planned major repairs or renovations. These can significantly impact strata fees or result in special levies. This information can be easily found in the strata’s depreciation report if available. If not check in with Realtor, read the strata documents and consult with a qualified home inspector.
- Health of the CRF – A healthy Contingency Reserve Fund indicates good financial planning and reduces the likelihood of unexpected levies. Again this can be ascertained by reading the strata minutes.
Strata Fees and Presales
When buying a presale, developers are required to provide an estimate in their disclosure statement of what the maintenance fees will be for the presale they are selling. Please note that these are estimates, but they tend to be quite accurate as in the past there were issues with developers underestimating maintenance fees.
When buying a presale make sure to review the disclosure statement to clearly understand what the maintenance fees will be once the building completes. Please do keep in mind that once the building is completed, maintenance fees may change (typically increase a bit) once a strata council is established and they understand the changes they need to make the strata budget.
Tips to Save on Strata Fees
An individual strata lot owner will have the most influence on strata costs by getting elected to the strata council, which can allow them to influence the following:
Proactive Maintenance: Regularly maintaining property elements like roofs, plumbing, and elevators can prevent costly emergency repairs. Proactive maintenance on strata property will reduce the chance of insurance claims which is also a very good strategy to keep the insurance cost and insurance premium as low as possible strata.
Review Contracts: Periodically reassess contracts with service providers to ensure competitive rates.
Energy Efficiency: Implementing energy-saving measures, like LED lighting or energy-efficient appliances, can reduce communal utility costs.
The Importance of Attending Strata Meetings
Voice in Decisions: Attending meetings allows owners to vote on decisions that might impact fees, such as approving budgets or major projects.
Stay Informed: Regular attendance keeps owners updated on financial matters, upcoming projects, and community issues. If you cannot attend a strata meeting, be sure to read the strata meeting minutes and/or check in with the strata manager for more detail.
Strata Fees BC FAQ
What Are Strata Fees in British Columbia?
Strata fees in British Columbia are monthly contributions by each strata lot owner, used for managing and maintaining shared areas and services.
What do Strata Fees Cover?
Strata fees in British Columbia typically cover maintenance and repairs of common areas, insurance for common property, management fees, contributions to a contingency fund for future repairs or unforeseen expenses, and utilities for common areas.
How Are Strata Fees Calculated in BC?
They are calculated using the unit entitlement method, dividing the strata’s total budgeted expenses by each lot’s size or value.
What Is the Average Increase in Strata Fees in BC?
Strata fees in BC often rise faster than inflation, influenced by various factors including maintenance needs and legislative requirements.
Can Strata Fees Increase Significantly in BC?
Yes, increases can be significant, driven by inflation, unexpected repairs, and increased maintenance costs.
Are Strata Fees Monthly or Yearly in Terms of When They Are Collected?
Strata fees are typically collected monthly in British Columbia.
What is a Strata?
A strata, in the context of British Columbia’s real estate, refers to a form of property ownership where individual owners have exclusive ownership of their residential units and shared ownership of common property and assets. This structure is typically found in condominiums, townhouses, and similar multi-unit complexes. Strata owners are part of a strata corporation, which manages the property and oversees the maintenance and administration of shared spaces and services.
Are There Any Tools to Predict Strata Fee Increases in BC?
There are no specific tools for predicting exact increases in strata fees, but owners can use historical data, current inflation rates, and upcoming major repairs for estimates.
How Can Homeowners Prepare for Rising Strata Fees in BC?
By regularly reviewing their strata corporation’s financials, understanding budgets, and setting aside funds for potential increases or special assessments.
Do Strata Fees Include Utilities?
Strata fees cover utilities for common property but not for individual lots.
Are Townhouse Strata Fees Different from Condos?
Yes, townhouses in some stratas may have higher fees due to factors like exterior maintenance or landscaping.
Strata Fees vs Condo Fees vs Maintenance Fees?
In BC, they are the same.
Do Townhouses Have Strata Fees?
Yes, if part of a strata with shared common property.
How Often Are Strata Fees Paid?
Monthly, on a specific day.
Do Strata Fees Include Property Tax?
No, property taxes are separate from strata fees.
How Are Strata Levies Calculated?
Based on each lot’s unit entitlement, representing their share of the building and common property.
Do Strata Fees Include Insurance?
Yes, for common property, but individual strata lot and unit insurance is separate.
How to Reduce Strata Fees?
Get involved in the strata council to influence budgeting.
Who Pays Strata Fees When Renting in BC?
The strata lot owner, not the tenant.
Do Strata Fees Include Electricity?
Only for common areas, not individual lots.
How to Find Strata Fees?
Strata fees can be found on the Form B, which is an important document given to buyers when purchasing a strata property. For existing owners, the strata documents should have any changes to strata fees. If an owner cannot find the maintenance fee there, the strata manager or strata council (if there is no strata manager) should know the strata fees for each unit.
Strata Fees in Conclusion
Strata fees, while often a point of contention, are essential for the smooth operation of a strata corporation.
They ensure that shared spaces and amenities are well-maintained, enhancing the quality of life for all residents.
The Strata Property Act of British Columbia provides a robust framework, ensuring fairness, transparency, and accountability in the calculation and utilization of these fees.
As strata living continues to grow in popularity, understanding the intricacies of maintenance fees becomes even more crucial for current and potential owners.
Are Condo Fees Good or Bad in BC?
When buying a condo, buyers often think low maintenance fees are good. Not always! Please have a look at our post on why high strata fees are good.
Looking to Calculate the Cost of Selling your home?
Check out this detailed realtor commission calculator to understand exactly how much it will cost to sell your property in BC.