Are Strata Fees Worth It?

I will warn you that the answer to the above question is in my eyes, nebulous. It’s case by case in terms of the strata and your own tastes and financial situation.  There are many pros and cons in either decision in terms of things both financial and lifestyle.

First off, let’s  be clear on some of the concepts I discuss here. Click on the below to follow the link to other posts that explain these terms in further detail or just keep reading for the gist of things.

What does strata mean?

What’s a strata fee?

What’s a special assessment?

A strata fee is the monthly fee you pay when you live in a townhome or condo and some other kinds of properties. The money is mostly used for maintenance of the shared parts of the complex (called “common property”) and management. It may also include certain utilities like hot water or heat for example. What you get for that money will vary from complex to complex. I have seen places that are as low as $85/mo and as high as $500/mo.  Generally the cheaper fees mean you get less offered but the size and price of the property are also a big factor.

Strata are not quite the same as pad rental fees for mobile homes in mobile parks. Pad fees are you renting the land for your mobile. Pad rental fees (the monthly fee you pay for having your mobile in the park) which we see for mobile homes in their parks those are typically $350-450 in our area. Rent is different from a strata fee, but it is also a kind of money you pay monthly when you own a property.

But let’s focus on strata fees.

The point of stratas is that homes are cheaper when,more things are shared. It’s cheaper to build one big building with lots of units than it is to build the same number of houses each with their own roof, foundation and taking up more lot space. Stratas are therefore, as a rule, cheaper to buy per square foot.  The roof, siding, windows, parking, landscaping , lobby,  and potentially other things are shared and need to be maintained and managed. If there were no strata fees, these things would simply get dirty, overused and ruined. A system exists that manages the hopes, expectations and needs of all the owners regarding the (surprisingly complicated) maintenance of the strata complex.

If you buy a house, you don’t have to pay the monthly fee for maintenance, but you do have to pay for the repair and/or replacement of the roof, siding, windows, parking, landscaping etc. and unless you’re the sort of person who really plans ahead with their money, you won’t have been making monthly payments towards that expense years before it arrives.

But which is a better deal long term? I’ve tried to figure this one out by estimating maintenance costs of houses to the owner vs. the ongoing strata fee. I’ve really thought about this deeply and I’ve decided that it is too much a case by case thing in terms of each strata complex, each house, each Buyer’s financial habits and housing maintenance knowledge to come to a firm decision on. In other words, speaking in the big picture of averages I can’t see either as better than the other. The thing is that no one person is exactly average and neither is any one property. So, intelligently considering the ins and outs is a matter of discussion between a good Realtor and a good client.

You see, if a condo building is properly managed, and if there are no bad surprises in regard to the craftsmanship of the shared areas of the building, the regular fee should cover the ongoing maintenance and repair of the common areas. This way, a big all at once special assessment fee shouldn’t happen. (But they do sometimes, which is another post in itself. )

If it’s your own house, you won’t have to pay a monthly fee but you will have to pay for the big expenses like a new roof, new windows, new siding or what have you all at once instead of paying for it bit by bit as you would in a well run strata complex. The same planning pitfalls do exist in the single family home as well. If you try to cut corners and don’t do proper maintenance or repairs or if the home was shoddily built you will be more likely have a major expense on your hands all at once, more so as the property ages. However, as the building is not shared, you can decide your own fate and not have to hope that as a group the right decisions are made. Also, it bears mentioning that you could even save for such repairs but imposing a monthly savings plan on yourself. You might even invest that money and watch it grow while it waits to be used.

I could talk more about things like the effect on equity based on how much you’re paying per month, whether it’s cheaper to share a roof or what have you among many people instead of just for yourself or whether the small portion that goes towards paying for management makes it not worth it. So much to consider.

Here is a list of food for thought when trying to decide on whether to go strata or single family:

  • Your average strata is smaller and cheaper than your average house.
  • A strata is less for you to think about in terms of maintenance. Unless… you volunteer to join the strata council.
  • Your freedom to do what you want with a strata is more limited and the decisions made by the group may not make sense for you.
  • Stratas are more likely to be withhin walking distance to amenities which is a plus for convenience but may mean less quiet. New ones have better sound proofing though, but then again the same goes for houses.
  • They typically have no yard, and even if they do it’s probably not big or exclusively yours.  That may be a good thing or not depending on your preferences.
  • Some stratas have a clubhouse which may include things like a pool table, guest rooms, an exercise room and space to hold private parties.

In the end, I think the main thing to think about is a combination of what you’re able and willing to get mortgage wise and what lifestyle makes sense to you.

Ryan Coffey