By: Jon Lumer

When Is The Strata Fee Too High?

Tags: Buyers, Homes in Vancouver, Condos in Vancouver

Being a discerning buyer usually means rejecting a lot of properties. This one doesn't have parking, this one has a bedroom that's just too tiny, and this one doesn't have in-suite laundry...

 

But while everyone must sift through a good number of unsuitable properties in order to find those few that meet all the necessary criteria, it's important not to throw the proverbial baby out with the bathwater, as it's already hard enough to find properties without mistakenly eliminating good candidates.

 

One sorting technique that can lead to unneccessary rejections is an overly simplistic approach to strata fees and just where their upper limit should be.

 

Although it remains true that, in principle, a lower strata fee is better than a higher one, in practice such statements are meaningless until a fuller examination reveals exactly why one might be lower and another higher.

 

At any moment, a strata corporation's financial statements may indicate that a low strata fee is only artificially low. When it is clear that savings are inadequate for upcoming projects and strata lot owners are merely postponing the inevitable, a low strata fee no longer appears quite so wise or desirable.

 

Conversely, a relatively high strata fee may indicate a responsible and fiscally prudent strata, as opposed to a strata that has simply found itself in hot water for whatever reason, or just tends to incur substantially higher operating costs.

 

I personally prefer higher strata fees when it means fewer and smaller special levies over time, though I note that some individuals will actually choose higher special levies to higher strata fees when given the choice. One possible motivation is that the individual may believe that she can grow her money while more of it remains in her possession over a longer period. This is perhaps true in many instances, but even where the individual is personally lucky, there are increased chances that other strata lot owners will not be able to pay large special levies and this could delay important capital projects that ought to be completed promptly.

 

Finally, in this year of COVID-19, many have forgotten that it is also the year of jaw-dropping insurance increases across British Columbia for strata property owners.

 

Consequently, if strata corporation A has higher strata fees than strata corporation B, it may simply be that A's new insurance costs are already reflected in the strata fee whereas B's fees are comparatively low because those higher insurance costs are not yet incorporated into the fees.

 

As always, get as much information as possible and get input from an experienced agent.