What’s a Reasonable Condo Fee Increase in Ontario?
Practical Guidance for Smarter Condominium Governance in the Sarnia and London Areas
Condo boards across Ontario regularly ask: How much should condo fees increase each year? The answer depends on inflation, reserve fund requirements, insurance costs, and long-term financial planning. In this guide, we break down what’s considered reasonable, and when higher increases are financially responsible.
At Sapphire Condominium Management, we work with condo boards across Sarnia, London, and Southwestern Ontario, managing millions in annual condominium budgets. One of the most sensitive discussions every year is the annual condo fee increase, and how to justify it clearly to owners.
What's a Reasonable Condo Fee Increase in Ontario?
Every budget season, the same question surfaces in board rooms across Ontario: how much can we realistically increase fees without triggering a revolt at the AGM? It's a question that balances financial responsibility against owner relations — and getting it wrong in either direction creates problems.
Increase fees too little, and you underfund reserves, defer maintenance, and set up future boards (and future owners) for much worse pain down the road. Increase fees too much, and you may be right on the numbers but wrong on the communication — leaving owners feeling blindsided and resentful.
There's no single "right" number for a reasonable condo fee increase, but there are clear benchmarks, legal requirements, and practical considerations that should guide every board's decision. Here's what you need to know.
The Honest Answer: It Depends on Your Building
Before we get into numbers, let's acknowledge something important: "reasonable" is relative. A 3% increase for a new building in excellent condition with a fully funded reserve is very different from a 3% increase for a 30-year-old building that has been underfunding its reserve for a decade. Context matters.
That said, here are the reference points that most Ontario boards use when planning annual fee adjustments:
• Consumer Price Index (CPI) inflation: A fee increase that tracks CPI (typically 2-4% in normal economic conditions) is generally seen as the minimum baseline — it simply keeps pace with the rising cost of goods and services.
• Reserve fund study recommendations: If the reserve fund study calls for higher contributions, that is a non-negotiable driver. The Act requires it.
• Operating cost increases: Rising insurance premiums, utility rates, and contractor costs may push operating budget increases above CPI even in a given year.
• Deferred increases: If fees have been held flat for several years, a catch-up increase may be necessary — and it will be larger than if increases had been applied consistently.
The Risk of Keeping Fees Too Low
One of the most common mistakes in condominium governance is holding fees artificially low to avoid conflict. It feels like the right thing to do — owners are happy in the short term, and board members don't have to face uncomfortable questions. But it almost always backfires.
When fees are held below what's actually needed, one or more of the following happens:
1. The reserve fund becomes underfunded. This doesn't show up immediately, but when a major capital project hits — roof replacement, elevator overhaul, parking structure repairs — the money isn't there. The result is a special assessment, sometimes in the thousands of dollars per unit.
2. Operating shortfalls accumulate. Minor deferral of routine maintenance turns into major repair costs. A $5,000 waterproofing job deferred for three years becomes a $40,000 water damage remediation project.
3. Future boards are forced into larger, more disruptive increases. An ownership community that accepted 0% for five years is not emotionally prepared for a 15% catch-up increase — even if it's the right number.
The most financially responsible boards in Ontario are the ones that apply steady, consistent, modest increases every year rather than holding fees flat and then asking for a large catch-up.
Industry Benchmarks: What Ontario Boards Are Actually Doing
While there is no official database of condo fee increases in Ontario, property managers and industry associations generally report that annual fee increases in the range of 3-6% are typical for well-maintained buildings during normal inflationary periods.
In 2022-2024, many buildings saw higher increases — in the 6-12% range — driven primarily by:
• Dramatically increased insurance premiums (in some cases 20-40% year over year)
• Natural gas and hydro rate increases
• Significant increases in contractor and trade labour costs
• Reserve fund study updates reflecting higher construction cost escalation factors
A fee increase in the 8-10% range during this period was not mismanagement — it was responsible financial stewardship. The challenge was, and remains, communicating that clearly to owners who may feel the increase is excessive.
What the Ontario Condominium Act Requires
The Act doesn't set a maximum for fee increases, but it does create obligations that drive them. Specifically:
• Boards must fund the reserve at the level recommended by the reserve fund study, or at 10% of operating expenses — whichever is greater.
• The annual budget (and therefore fees) must be set and distributed to owners at least 15 days before the start of the fiscal year.
• Boards must conduct a reserve fund study every three years (with an update in the off years) and cannot simply ignore the findings.
This means that if your reserve fund study recommends increasing annual contributions by $150 per unit per month, the board is legally required to do it. Explaining that to owners — framing it as legal obligation and sound financial stewardship, not a discretionary choice — is one of the most important jobs of good communication.
How to Communicate a Fee Increase Effectively
The way a fee increase is communicated matters almost as much as the number itself. Owners who understand why fees are going up, and can see the specific drivers, are far more likely to accept the change than owners who receive a form letter with a new number and no explanation.
Best practices for communicating fee increases:
• Send a budget summary letter to all owners at least 30 days before the new year (not just the minimum 15 days required by law)
• Break down the increase by category: "3% for operating cost increases, 2% for reserve fund contributions" is much more convincing than just "5% increase"
• Reference the reserve fund study by name and date — remind owners that this is a professionally prepared, legally required document
• Use plain language, not accounting terminology
• Hold a pre-budget town hall or Q&A session to give owners a chance to ask questions before the increase takes effect
• Make the full budget available to any owner who requests it under the Act
At Sapphire, we work with boards to create budget letters and owner summaries that explain increases clearly and head off the most common objections before they become AGM confrontations.
When Is a Fee Increase NOT Enough?
Sometimes a fee increase isn't sufficient — a special assessment is also needed. This is typically the case when:
• A major unexpected repair arises (foundation crack, flood damage, fire remediation) that exceeds reserve fund capacity
• A building has chronically underfunded its reserve and needs to catch up quickly
• A capital project is identified that wasn't included in the most recent reserve fund study
Special assessments are a last resort, and boards should work hard to avoid them through consistent reserve fund contributions. But when they're necessary, they should be communicated as transparently as possible: what the project is, why reserve funds are insufficient, how the assessment was calculated, and what the payment options are.
Frequently Asked Questions
Is there a legal maximum on how much condo fees can increase in Ontario?
No. Unlike residential rent, there is no provincially mandated cap on condo fee increases. Fees can increase by whatever amount is necessary to fund the approved budget and required reserve contributions. This is why proactive reserve management and transparent communication are so important — the law provides no safety net against large increases caused by poor planning.
What can I do if I think my condo fee increase is unreasonable?
You have several options as a unit owner. First, request the full annual budget and reserve fund study from the board — you have a legal right to these documents. Second, review them for errors or apparent overspending. Third, raise your concerns formally at the AGM or through a written request to the board. If you believe the board is not meeting its obligations, you can contact the Condominium Authority of Ontario (CAO) or seek professional advice.
Should we increase fees a little every year or hold them flat and do a bigger increase less often?
Small annual increases are strongly preferable. Consistent modest increases are more sustainable, easier for owners to budget for, and less likely to create reserve fund shortfalls than periodic large catch-up increases. Many experienced property managers recommend budgeting for at least a 3% annual increase as a baseline, adjusting upward based on actual cost drivers and reserve fund requirements.
How do we handle an increase driven entirely by insurance — can we explain that to owners?
Absolutely, and you should. Insurance premium increases are a documented, third-party cost that boards have limited control over. Share your insurance renewal invoice with owners (redacting any sensitive details if needed) and explain that the increase is being passed through at cost. Most owners will accept a factually supported insurance-driven increase much more readily than a vague "general cost increase."
Wanting to learn more about condo fees? Here are some other helpful articles: