How much can strata fees increase in BC, and who decides?

Buyers want to hear that there is a cap on strata fee increases. As far as I know there is no general cap set by law. Strata fees go up when the owners approve a budget that costs more, and the budget costs more when the building does. I sit on a strata council, so I see this from the inside: the fee is not set by a landlord. It is set by the owners, for the owners, and it follows the bills.

Where the fee comes from

Every year the strata council prepares a proposed budget for the annual general meeting. It has two parts. The operating fund pays for the year's running costs: insurance, management, utilities for the common areas, landscaping, cleaning, elevator maintenance and routine repairs. The contingency reserve fund is the building's savings for big items that come due later, such as roofs, boilers, membranes and siding.

Your share of the total is set by your unit entitlement on the strata plan. It is not based on how much you use. Divide the budget by the entitlements and you get each owner's monthly fee.

Who decides

The council proposes, and the owners decide. Under the Strata Property Act, the budget is approved by a vote of the owners at the annual general meeting. If the owners reject it, the council has to come back with another one, and the building keeps running in the meantime under rules the Act sets out.

A special levy is a separate decision. It is a one-time charge for a specific expense, and it needs a higher level of approval than the annual budget. The Act, and the Province's strata housing pages on gov.bc.ca, describe the votes required. A strata can also borrow, or spend from the contingency fund, for some purposes.

Why fees rise

The single biggest driver in many BC buildings in recent years has been insurance. When premiums or deductibles rise, the budget has to absorb it. After that come wages for trades and management, utility costs, and the building's age. As components age, the depreciation report calls for larger contributions to the reserve, and a council that kept fees artificially low in earlier years eventually has to catch up.

That is the point buyers should understand: a low fee is not automatically good news. Sometimes it means the building is efficient. Sometimes it means the owners have been underfunding the reserve, and the bill is still coming.

How to see an increase coming

Ask for the documents before you remove subjects. The Form B Information Certificate shows the current fees, any approved special levies and the balance of the contingency reserve fund. The minutes of council and general meetings for the last couple of years show what the owners have been discussing. The depreciation report lays out what needs replacing and when, and what the reserve should look like. The current budget and financial statements show where the money goes, and the insurance summary shows the premium and the deductibles.

Read them together. If the minutes mention repeated leaks, an insurance renewal that went badly or a roof nearing the end of its life, and the reserve is thin, an increase or a levy is likely. Recent changes to the BC rules on depreciation reports mean more buildings must have current ones, which makes this easier to check than it used to be.

How I handle this when I buy or help a client buy

In a Langley condo or townhouse, I read the minutes before I look at the finishes. Then I compare the contingency reserve with what the depreciation report says it should be. A well-funded building that charges what it actually costs to run is usually the safer purchase, even if its fee is higher than the building across the street.

When a buyer asks me "will the fees go up", my answer is: probably, like everything else. The real question is whether they will go up gradually because the building is well run, or suddenly because it was not.

Thinking about buying or selling in the Fraser Valley? Message me and we will go through your options.