According to a Smartmoney.com article on NY Real Estate, the average NYC co-op maintenance fee climbed 19% from 2009 to 2010 (to $1.76/SqFt per month, as quoted by Miller Samuel Appraisers). In 1999, when I started as a Manhattan agent, the average was generally quoted as between $1.00 to $1.25/Square Foot per month.
Why the increases? The primary culprit has been property tax increases. Facing budget gaps, NY City has turned to real estate property tax as a source of income, driving up building costs. For co-op buildings that fee is passed directly down to the individual shareholders, in their maintenance.
Other costs such as payroll, water, fuel, insurance and building upkeep add upward pressure on bills. One big addition - in the Spring of 2010, the unions that cover doormen, superintendents and other building workers threatened a walk-out. As a result, the owners of 3,000 buildings agreed to a new 4-year contract providing an almost 10% increase in staff wages.
Co-ops are primarily limited to maintenance and temporary or permanent assessments as a method of raising funds. Some co-ops also benefit from the rent of attached commercial space. During the boom, with rising bills looming, more co-ops instituted a “Flip-Tax”, a fee paid (usually by the seller) to the co-op, upon the sale of their unit, which range from 0.5%-3% of the sale price or a fixed per-share number.
What Can You Do? Currently an owner? Check with your Managing Agent to find out if your building’s taxes have increased (the fiscal year begins in July for NYC). If so, ask whether or not the board is considering a maintenance increase in 2011, and put some money in reserve.
Are you a buyer? Ensure your real-estate attorney double checks any proposed maintenance increases or assessments the board may be considering, before signing a contract. Finally, in calculating your ownership costs over the expected life of your ownership, assume that maintenance will increase and be prepared for it. (Email Tony Sargent for more information by clicking the Contact button at the top)