Purchasing/Living in a Condominium
Can Condos Remain Affordable?
From the Spring 2022 issue of CCI Toronto Condovoice Magazine, Volume 26, Issue Number 3
Concern in Canada is Growing Over Affordability, Availability, Rising Inflation, and Limited Supply of Housing Stock
Affordability and availability of housing stock across Canada are two important issues for all Canadian condominium owners. With inflation on the rise and supply appearing to be limited, it is concerning how average Canadians will continue to afford to live in their own home. Condominiums in this regard have been afforded the opportunity for economies of scale to be leveraged by sharing in the cost of operating a community on a nonfor- profit basis.
Condominiums, we know, as they age need to consider capital asset replacement costs and what level of replacement is appropriate given the age of the condominium. We have condominium stock from the late 1960's in Toronto which may be at the end of its life span or need major repair and replacements done, especially if the same have been neglected, to ensure that the condominium is fit for living. Accordingly, condominiums need to be actively and adequately saving for these replacements in their reserve funds. Is your reserve fund keeping up with the cost of living in Toronto? Should you have more options for investments? If so, how do you manage risk and reward?
But the game of chasing the buck does not stop there! Condominium owners and directors need to examine more closely and deeply the monetary fairness of the condominium model within the fabric of society. Do you pay taxes? What for? waste management, access to justice, sewage? Are condominiums over paying or being exploited? Here is what I see:
1) The downloading of infrastructure costs on to condominiums. Items such as water management systems are being put on the shoulders of condominiums as well waste management has been added to the operational costs of condominium. Whereas single family dwellings receive these services. Where does the balance lie?
2) No access to courts even though we are entitled to access to justice via the courts. Condominium owners pay for access to justice but courts are denying condominiums access to the court systems they pay for and forcing them to pick up the costs of mediation and arbitration. Why? Is this democratic?
3) Paying for a specialized tribunal. Every condominium has to pay for the Condominium Authority of Ontario. Who is paying for the infrastructure? Before the CAT, condominiums relied on the court system, a separate arm from the government and it policies, which is a fundamental component to the democratic structure. Condominiums did not take up or use a disproportionate share of the time of the courts based on the number of tax payers paying into the court system via their taxes. However, condominiums seems to be getting caught in the crossfire of policy.
4) Not being reimbursed for the costs of going to the Tribunal to enforce compliance against owners who breach their obligations which is against the consumer protection mechanisms of the Act. The message is confusing, if you do not break the rules, you end up paying the costs of both the Tribunal and your advocates to uphold the laws of the Province and the condominium against unit owners who breach. Is that real consumer protection? Innocent condominium owners are paying twice. A key premise of the Condominium Act is consumer protection and the structure that was developed by experienced and wise stakeholders was the view that bad actors should pay the cost of their bad acting. Is it fair that complying unit owners subsidize the cost of bad actors?
5) The failure to give condominiums a tax break where there are commercial components. Yet commercial owners get tax benefits from operations such as an HST input tax credit and the ability to deduct losses against business income.
6) No reduction or rebates for taxes for services downloaded to the condominium.
7) The erosion of market value through the downloading of costs. What would you pay for a high maintenance car? If you have lots of money, no worries but what about the average car driver. I prefer low maintenance bills and a reasonable cost of entry.
So now the question I have is: "Please show me the money and show me where the increased taxes per square foot of a density packed city block are going?" These monies should be spent on meaningful infrastructure such as sewer system upgrades, hospitals, schools, parks and resources for the benefit of communities and to deal with the impact of density. Where does the balance between bureaucracy and tangible outcomes lie?
In my opinion, condominiums will not remain affordable if there is a constant downloading of costs to unit owners, which amounts to just more taxation of condominium owners instead of society as a whole. It is not just about the ability to purchase a home anymore only, it is becoming more about whether or not we can afford the additional burdens place on condo owners to operate their homes.
Let CCI Toronto know if you have any constructive solutions to these problems that lurk beneath the surface.
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