Are Strata Fees Worth It?

Ryan Coffey

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.

After a great deal of reflection on the matter, I have come to the conclusion that  (in most cases) it is more of a lifestyle decision than a financial one. You see, there are many pros and cons in either decision in terms of things financial and otherwise. Sure, you could micro analyze this for each and every individual combination of Buyer and property, but we’re talking about homes here. The finances are a big factor, but there are so many others that add up to the result of how happy and satisfied you are with where you live. The rule of thumb being to buy something you can comfortably afford first and foremost. The rest is, again, down to your tastes and plans.

First off, you may be wondering what a strata fee actually is. This is one of those points where I could give a very long an technical, jargon filled answer on but I won’t. The short of it is that the monthly fee you pay when you live in a townhome or condo for example. The money is generally 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 $350/mo.  Generally the cheaper fees mean you get less offered but the size and price of the property are also a big factor.

On a related note, are pad rental fees for mobile homes in mobile parks. 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 $300-350 in our area. Rent is technically different from a strata fee, but it is money you pay monthly when you own a property.

But let’s focus on strata fees.

The point of  stratas is that there are all sorts of things that are shared. It’s cheaper to build one big building with lots of units than it is to build the same number of houses with the same square footage. They are therefore, as a rule, cheaper to buy.  The roof, siding, windows, parking, landscaping , lobby,  and potentially other things are shared and need to be maintained and managed. If there were not strata fees, these things would simply get dirty, overused and then ruined.

If you buy a house, you don’t have to pay the monthly fee, but you do have to pay for the repair and/or replacement of the roof, siding, windows, parking, lanscaping 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? I’ve tried to figure this one out by estmating maintenance costs of houses to the owner vs. the ongoing strata fee. I’ve really thought about this hard and I’ve decided that it is too much a case by case thing in terms of which complex,  which house as well as in terms of the Buyer’s financial habits and   to come to a firm decision on.

You see, if a condo building is properly managed, and if there are no bad surprises in regard to the craftmanship of the shared areas of the building, the regular fee will ideally cover the ongoing maintenance and repair of the common areas. This way, a big all at once special assessment fee shoudn’t happen. (But they do sometimes, which is another post in itself. Mostly it was an issue in certain stucco sided complexes built in the 90’s but it also happens when the strata owners get together and vote to have lower fees ignoring the need to save for impending major repairs like a new roof.)

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.  The same pitfalls exist in the single fmaily 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. 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 easily 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.

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.  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.
  • 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 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.

Ryan Coffey