Special Levy vs. Strata Fee Increase: Which Costs Owners Less?
- 2 days ago
- 5 min read
Few topics create more debate at an Annual General Meeting than money. When a major repair is approaching—a roof replacement, parkade rehabilitation, elevator modernization, or building envelope repair—owners often hear two competing proposals.
One group argues that strata fees should increase gradually to build the Contingency Reserve Fund (CRF). Another believes it's better to keep monthly fees lower and simply approve a special levy when major work becomes necessary.
Neither option is automatically right or wrong.
The best approach depends on the building, its financial position, upcoming capital projects, and long-term planning. Unfortunately, many strata corporations make these decisions based on what owners can afford today instead of what the building will realistically need tomorrow.
Understanding the difference between a special levy and a strata fee increase can help councils make more informed decisions—and avoid unpleasant financial surprises later.
What Is a Special Levy?
A special levy is a one-time contribution collected from owners to pay for expenses that cannot be funded through the operating budget or the Contingency Reserve Fund.
Most commonly, special levies are used for major capital projects such as roof replacement, building envelope remediation, plumbing replacement, or parkade repairs.
Unlike monthly strata fees, a special levy is typically calculated based on unit entitlement and can require owners to contribute thousands—or sometimes tens of thousands—of dollars within a relatively short period.
The Strata Property Act sets out the voting requirements and procedures for approving a special levy.
What Happens When Strata Fees Increase?
Increasing strata fees works very differently.
Rather than collecting a large amount of money at once, the strata corporation gradually builds its reserve fund over time. Higher monthly contributions allow the Contingency Reserve Fund to grow steadily, making future capital projects less financially disruptive.
For many owners, paying an additional $30 or $50 per month feels far more manageable than receiving an unexpected special levy for several thousand dollars.
However, increasing strata fees is not always popular. Owners naturally focus on monthly affordability, especially during periods of higher mortgage rates and rising living costs. This often creates a difficult balancing act for strata councils.
Why Low Strata Fees Aren't Always Good News
Many buyers are attracted to buildings with unusually low strata fees.
At first glance, lower monthly costs appear to make ownership more affordable. But experienced buyers—and increasingly, lenders—often ask a different question:
Why are the fees so low?
If contributions to the reserve fund have remained relatively unchanged for many years despite aging building components and rising construction costs, it may indicate that future owners will eventually face larger special levies.
In other words, low strata fees today can sometimes mean higher costs tomorrow. That doesn't mean every building with modest fees is underfunded. However, fees should always be evaluated alongside the building's reserve fund, age, maintenance history, and long-term capital plan.
The True Cost of a Special Levy
A special levy isn't just a financial decision—it can also influence owner satisfaction, buyer confidence, and even resale activity.
Imagine two similar strata corporations. Both need a $2 million building envelope project.
Building A has consistently increased strata fees over the past decade, allowing its reserve fund to cover a significant portion of the project. Owners approve a relatively modest special levy to fund the remaining balance.
Building B kept strata fees artificially low for years.With insufficient reserve funds available, owners suddenly face a levy exceeding $25,000 per unit.
The repair project is identical. The financial experience for owners is not.
Special levies can also create practical challenges. Some owners may need to arrange financing, refinance their mortgage, or sell their unit if they cannot pay the assessment. This is one reason many strata councils aim to reduce reliance on large, unexpected levies whenever possible.
Is Increasing Strata Fees Always the Better Choice?
Not necessarily.
There are situations where a special levy makes good financial sense. For example, if an unexpected event—such as storm damage or a sudden mechanical failure—requires immediate repairs, increasing monthly strata fees may not generate funds quickly enough.
Similarly, some capital projects arise unexpectedly despite good planning. In these cases, a special levy may be the most practical solution. The key is distinguishing between unexpected events and predictable capital expenditures.
A roof reaching the end of its expected service life is not unexpected. Neither is an aging elevator or deteriorating building envelope. When repairs are predictable, funding them should ideally be part of long-term financial planning rather than an emergency response.
Construction Costs Continue to Rise
Another factor that many owners overlook is inflation.
Construction costs across British Columbia have increased significantly over the past several years due to labour shortages, material costs, and supply chain challenges. Delaying reserve fund contributions doesn't simply postpone expenses—it often means the same project will cost considerably more in the future.
Statistics Canada continues to report increases in non-residential and residential construction price indexes, reflecting the broader trend affecting repair and replacement projects.
For strata corporations, this reinforces the importance of building reserve funds gradually rather than assuming future costs will remain stable.
So, Which Option Actually Costs Owners Less?
There is no universal answer.
From a purely financial perspective, gradual reserve funding often reduces the likelihood of large special levies and provides greater flexibility when major repairs arise. From an owner's cash flow perspective, modest annual increases in strata fees are often easier to manage than a significant one-time assessment.
However, every building is different.
The right decision depends on factors such as:
the age of the building
the condition of major building systems
upcoming repair timelines
current reserve fund balance
projected capital expenditures
Without understanding these variables, comparing strata fees and special levies becomes largely guesswork.
Why a Depreciation Report Matters
This is exactly where a Depreciation Report becomes invaluable.
Rather than asking whether strata fees should increase or whether a special levy should be approved, a Depreciation Report asks a more important question:
What will this building actually need over the next 30 years?
A professionally prepared Depreciation Report evaluates major common property components, estimates their remaining useful life, forecasts future replacement costs, and models funding requirements.
Instead of relying on opinions at council meetings, strata corporations can make financial decisions based on objective engineering analysis and long-term planning.
Final Thoughts
Special levies and strata fee increases are not competing strategies—they are financial tools.
The goal should never be to eliminate one entirely. The goal is to ensure the building has enough resources to maintain its assets without placing unnecessary financial strain on owners.
Buildings that plan ahead generally experience fewer surprises, smoother capital projects, and greater financial stability over time. The question isn't simply whether owners should pay more today or tomorrow. It's whether the strata is preparing for costs that are already inevitable.
At ENGIPRO, our Professional Engineers prepare comprehensive Depreciation Reports that help strata corporations understand future capital expenditures, evaluate reserve fund adequacy, and make informed funding decisions before major repairs become financial emergencies.
Whether your council is debating a special levy, reviewing its reserve fund strategy, or planning long-term maintenance, a current Depreciation Report provides the information needed to support confident, data-driven decisions.
Contact ENGIPRO today!
Resources:
Strata finances and insurance - https://www2.gov.bc.ca/gov/content/housing-tenancy/strata-housing/operating-a-strata/finances-and-insurance
Statistics Canada - https://www150.statcan.gc.ca/
Strata depreciation report requirements - https://www2.gov.bc.ca/gov/content/housing-tenancy/strata-housing/operating-a-strata/repairs-and-maintenance/depreciation-reports/depreciation-report-requirements
Comments