Vancouver is enjoying the reputation as being one of the most liveable cities in the world. A byproduct of this is our density is increasing at a phenomenal rate. For a variety of reasons more people are choosing an urban lifestyle (ie: condo living) than ever before. As a REALTOR ®, I watch with interest how these prospective Buyers face an unfamiliar enemy – strata, or maintenance fees, as they are also known.
Individual Owners are responsible for those expenses associated with their particular unit. Strata ‘fees’ are those costs associated with maintaining the building or complex as a whole. I find many Owners new to strata life have an unrealistic picture of the actual cost of maintaining a building and have historically been faced with unplanned for and costly asessments to pay for building upgrades and/or repairs.
Significant changes to the Strata Property Act over the past few years have resulted in a mandatory requirement for Strata Corporations to acquire a Depreciation Report which, in turn, will automatically be made available to a Buyer when purchasing a strata unit. A Depreciation Report is a visual, 30 year asessment of all systems pertaining to the complex and the corresponding cost of maintaining/replacing those systems over that period. This report is updated every 3 years. It is important to note the report is derived from a visual inspection only and one of the recommendations may be for a more detailed qualitative assessment on a particular system. The report offers the Strata Corporation three different funding models to deal with upcoming expenses.
The Idea behind these Depreciation Reports is to better equip the Strata Corporation as a whole to fund the maintenance of the various systems in a complex, ideally, with few or no special assessments. How to come up with a comprehensive plan that will be agreeable to the majority of Owners? Whatever the plan of action, one thing is certain; Vancouver’s maintenance fees are on the rise. We are currently at an average of approximately $.40/sq.ft., although it is not uncommon to see fees dip below $.30/sq.ft.
It is common for newer developments to postpone their Depreciation Reports (to do so, this must be done by a 3/4 vote at the Annual General Meeting every year.) The reationale is that the complex still falls under the 2-5-10 warranty. Personally, I would like to see the day come when it is mandatory for Developers to provide a Depreciation Report in much the same way they are bound to have the Buyer review the Disclosure Statement before the purchase of a “pre-sale.”
On a last note, while this requlation is new to us, our neighbours to the East have long been familiar with Depreciation Reports. While the next few years may prove tumultuous for Vancouver strata Owners, I believe the outcome will be positive.