The short answer: Ontario does not cap condo fee increases
Owners searching "how much can condo fees increase in Ontario" usually want a percentage. There isn't one. The Condominium Act, 1998 does not set a maximum by which common expenses may go up from one year to the next. Unlike residential rent, there is no provincially mandated guideline percentage for condo fees.
What the Act does require is that the corporation budget enough money to operate the building and to fund the reserve fund for major repairs and replacements. Common expenses (condo fees or maintenance fees) are simply each owner's share of that budget. If costs rise, or if the reserve fund study says contributions must increase, fees can rise by whatever amount the budget requires. That is why a five per cent increase and a twenty per cent increase can both be lawful, and why "is this increase allowed?" is the wrong first question. The better questions are whether the budget is realistic, whether reserve contributions meet the Act, and whether owners received a clear explanation.
This article is for Ontario and Toronto condo boards and owners. It explains what the Act does and does not limit, how the budget and reserve fund drive fees, what notice practices look like, and what recourse owners have. Separately, we cover why condo fees often rise faster than inflation and how boards can explain a condo maintenance fee increase to owners. This is general information, not legal advice.
What condo fees actually pay for
The Condo Authority of Ontario describes common expenses as the shared costs of running the corporation: maintaining the common elements, contributing to the reserve fund, and paying for services such as cleaning, building maintenance and condominium management. Your declaration sets the percentage each unit contributes. Multiply the corporation's budget by that percentage and you get that unit's share.
In practice, a monthly fee almost always has two large pieces:
- Operating costs for the current fiscal year: utilities for common areas, insurance, contracts, staffing, management, routine repairs, administrative costs and similar day-to-day expenses.
- Reserve fund contributions set aside for major repair and replacement of the common elements and assets over time, guided by the reserve fund study and the plan for future funding.
A fee increase can come from either side. Insurance renewals, utility rates and contract renewals push the operating side. An updated reserve fund study that recommends higher annual contributions pushes the reserve side. Boards that try to keep the percentage low by underfunding either side usually pay later through deficits, deferred maintenance or a special assessment.
What the Condominium Act does not limit
Section 84 of the Act requires owners to contribute to the common expenses in the proportions set out in the declaration. Nothing in that section, or elsewhere in the currently proclaimed parts of the Act, says those contributions may rise by no more than a fixed percentage. There is no "condo fee guideline" comparable to the residential rent increase guideline.
That does not mean boards have a free hand to spend without regard to owners. Directors owe a standard of care under the Act. They must act honestly and in good faith, and exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. Setting a budget that ignores known costs, or that starves the reserve fund contrary to the study and the Act's reserve requirements, is not disciplined budgeting. It is a governance problem. The absence of a percentage cap is not permission to be careless; it is a reminder that the legal test is adequacy of funding, not a fixed annual percentage.
What the Act does require: budgets and the reserve fund
Two obligations sit behind almost every legitimate fee increase.
1. Fund the corporation's objects and duties. Common expenses exist so the corporation can perform its objects and duties under the Act and the declaration. The board prepares an annual budget for the fiscal year. That budget should be based on expected operating needs plus the reserve contribution the corporation must make, not on a predetermined percentage that looks politically comfortable.
2. Keep an adequately funded reserve fund. Sections 93 to 95 require every corporation to establish and maintain a reserve fund for the major repair and replacement of the common elements and assets, to conduct reserve fund studies on the prescribed cycle, and to propose a plan for future funding. Contributions must be the amount reasonably expected to provide sufficient funds for those major repairs and replacements, determined with the study and plan. Before the first study is complete, the Act also sets a floor tied to a percentage of the operating budget. Once a study and plan are in place, boards that chronically under-contribute are not protecting owners; they are shifting today's costs onto tomorrow's special assessment.
When a corporation faces a shortfall it did not budget for, it may need a special assessment, borrowing (where properly authorized) or both. Our guide to avoiding special assessments through reserve planning explains how steady reserve funding reduces that risk. A large annual fee increase that follows the reserve plan is often healthier than years of artificially flat fees followed by an emergency levy.
Budget process, notice and how owners learn the new fee
Owners do not ordinarily vote to approve the annual operating budget. The board adopts it. What owners are entitled to is information: a budget they can understand, financial statements at the annual general meeting, and access to records under section 55 when they make a proper request.
Notice timing for the budget itself often comes from the corporation's by-laws and from good practice, not from a single simple percentage rule in the Act. Many corporations circulate the budget to owners before the new fiscal year starts so owners can see the change and ask questions. Proposed statutory rules that would prescribe a more detailed annual-budget notice process have been written into amendments to the Act, but boards should confirm with condominium counsel which provisions are in force for their corporation and what their by-laws already require.
In the meantime, boards should treat budget communication as part of their duty to owners:
- Send the budget (or a clear summary plus the full budget on request) before the new fees take effect.
- Separate operating changes from reserve contribution changes.
- Explain one-time items, insurance shocks, utility increases and capital-related contribution steps in plain language.
- Point owners to the reserve fund study summary and the plan for future funding when reserve contributions are the driver.
- Invite questions in writing and at the AGM, and document the answers.
How you say it matters as much as the number. Our companion guide on how boards can explain a condo maintenance fee increase to owners walks through communication, AGM discussion and trust-building when an increase is unavoidable.
Special assessments, chargebacks and other fee shocks
A special assessment is not the same as an annual fee increase. It is an extra amount levied when the budgeted common expenses are not enough, often after an unexpected repair, a lost court case, or years of underfunding. Chargebacks are different again: costs added to a particular unit's common expenses because of that owner's act or omission, or under the declaration. Neither is a substitute for an honest annual budget, and neither is capped by a provincial percentage guideline.
Owners sometimes ask whether a board can "just borrow instead." Borrowing may be available in some situations, but it usually requires proper authorization (often a borrowing by-law approved by owners) and it still has to be repaid, with interest, from future common expenses. Spreading pain over time can be responsible; hiding the need is not.
What owners can do when fees jump
If you are an owner facing a sharp increase, start with the documents, not with social media:
- Read the budget package and ask for a line-by-line explanation of the largest increases.
- Compare the reserve contribution to the latest reserve fund study and plan for future funding.
- Request records under section 55 if you need contracts, invoices or financial records the package does not include.
- Use the AGM to question the board and the auditor's report.
- Requisition a meeting under the Act if enough owners want the board to address the issue formally.
- Vote thoughtfully at director elections; chronic underfunding and chronic overspending are both board problems.
Where owners believe the board has acted oppressively or failed to comply with the Act, the Act provides court remedies, including compliance orders and the oppression remedy. The Condominium Authority Tribunal is the right forum for many disputes (for example records), but it is not a general "fee appeal board." Whether any particular increase is challengeable depends on the facts and on advice from a condominium lawyer. For cost drivers behind many recent increases, see why condo fees often rise faster than inflation.
Practical checklist for Toronto and Ontario boards
- Build the budget from expected costs and required reserve contributions, not from a target percentage.
- Stress-test insurance, utilities, contracts and wage pressures before you finalize the number.
- Align the reserve contribution with the current study and funding plan; document any reasoned departure after legal and engineering advice.
- Circulate a plain-language budget letter that separates operating and reserve drivers.
- Keep the reserve study, funding plan, budget and year-to-date financials ready for owner questions and status certificates.
- If the increase is large, plan the communication early; do not wait until the first higher pre-authorized debit hits.
How professional management helps
Brilliant Property Management has supported Ontario condo boards since 2002. An experienced manager helps the board build a realistic budget, translate the reserve fund study into a contribution schedule owners can follow, prepare clear owner notices, and avoid the false comfort of an artificially low percentage that creates a larger problem later. If your board wants disciplined budgeting and clearer fee communication, learn more about our condo property management in Toronto, review our full services, or invite us to respond through our request for proposal page.
Frequently asked questions
Is there a legal limit on how much condo fees can increase in Ontario?
No. Unlike residential rent, the Condominium Act, 1998 does not set a maximum percentage by which common expenses (condo fees) may increase. Fees must be set to fund the corporation's approved operating budget and its required contributions to the reserve fund. A large increase can still be lawful if it is needed to meet those obligations.
Who decides the condo fee increase?
The board of directors decides the annual budget, and each owner's monthly common expenses flow from that budget according to the contribution percentages in the declaration. Owners do not vote to approve the ordinary annual budget unless the corporation's by-laws say otherwise.
Do boards have to give owners notice of a fee increase?
Boards should circulate the budget and explain the change clearly before the new fees take effect. Many corporations' by-laws set timing for budget delivery. Check your by-laws and ask the corporation's lawyer what notice is required for your building. Owners also receive related financial information through information certificates, status certificates and materials for the annual general meeting.
Can a reserve fund study force fees higher?
The Act requires every corporation to maintain a reserve fund for major repair and replacement of the common elements and assets, and to keep that fund based on a reserve fund study and a plan for future funding. When a study shows contributions are too low, the board must increase contributions over time. That increase usually shows up in the common expenses owners pay.
What can owners do if they think a fee increase is unreasonable?
Owners can ask for a clear budget breakdown, examine financial records under section 55, raise questions at the annual general meeting, requisition an owners' meeting, and elect directors. In serious cases they may seek a court order under the Act or an oppression remedy. The Condominium Authority Tribunal generally does not decide whether an ordinary budget increase was 'too high.' This is not legal advice; speak with a condominium lawyer about your situation.
This article is general information about common expenses under the Condominium Act, 1998 and related Condo Authority of Ontario guidance. It is not legal advice. The Act, its regulations and which amendment provisions are in force change over time. Consult your condominium lawyer before relying on this information for a specific corporation or dispute.