It’s no secret that in the past year or two that condominium sales city-wide have been strong.
That’s not surprising, as condos — about one-fifth of all home sales in Winnipeg — are an affordable alternative to single-family detached homes which can be financially out of reach for singles, young families and professional couples just starting out.
With that affordability, however, comes a problem: potentially volatile condo fees and special assessments. The culprits for such potential pitfalls tend to be condo conversion projects.
It’s those smaller projects, which offer low condominium fees at their outset, that have in part prompted a change in the regulations to the Condominium Act governing condo sales.
Once enacted, those changes figure to make the condominium buying landscape less hazardous for consumers, said Brenda Brydges, a property manager and member of WinnipegREALTORS®.
“To put things in perspective, the current act has 30 sections; the new one will have 300,” she said. “It’s going to be a much more comprehensive act, an act that will greatly benefit consumers.”
Unfortunately, the act is not yet in effect. In something of an anomaly, two officials overseeing the act retired simultaneously. Hence, the act is in limbo for the time being.
“Our hope (the Canadian Condominium Institute-Manitoba chapter) is that it will come into effect within six months,” said Brydges. “It’s very important that the new act gets put in place. Right now, condominium conversion projects are really impacting the rental market.
“While those condominiums are affordable due to low prices and low condominium fees,” she added, “such projects don’t have proven track records. It’s all too easy for a buyer to get hit with a special assessment fee or a huge increase in condominium fees with such a project.”
The new condominium act will be of great benefit to consumers, according to Brydges.
“Basically, it’s going to make reserve studies mandatory,” she said. “The onus will be on the board of a condominium project to get the study done, and then to properly fund the reserve fund. This is going to put more responsibility on the shoulders of the developers of these conversion projects. If they underestimate the budget for repairs and upgrades, they will be held responsible; they can’t just arbitrarily hit condominium owners with a special assessment out of the blue.”
To ensure purchasers, as well as agents, boards, project owners, lawyers and accountants, are aware of what the regulations of the new condominium act entail, the CCI — its mandate is to represent all facets of the condominium community to encourage all interest groups to work toward one common goal — plans to be extremely proactive in making people aware of the changes to the act.
“We are going to be offering courses designed to educate not only the public, but everyone else involved in the process of buying and selling condominiums,” Brydges said. “The only way for people to understand the act is to get the news about the key changes out there. It’s an act that will benefit everyone, from consumers to those in the real estate industry.”
The key word associated with the new act is one that will be music to the ears of consumers, continued Brydges. “There’s just going to be more accountability for boards and project owners,” she said. “Everyone has to step up to the plate here. If that happens, everyone will benefit.”
That said, the only folks who don’t figure to benefit from the more stringent condo buying guidelines are renters.
“Without question, condominium conversion projects are impacting the rental market,” she said. “With more (supposedly) affordable condominiums available, the rental market is softening, creating higher vacancy rates. It’s a double-edged sword. Hopefully, rental prices will go down. But with the more reasonable rents will come fewer repairs, so the news is both good and bad for consumers.
“At the same time, the overall strength we’ve seen in condominium sales should continue, especially with all the new projects going on across the city,” she added.
In the meantime, it would be wise for prospective condominium buyers to educate themselves. To do that, visit the CCI-Manitoba chapter’s site at www.cci-manitoba.caby