‘Economic mismatch’: A shortage of Ontario condo managers is driving up fees

As the Ford government pins its hopes of solving Ontario’s housing crisis by building 1.5 million new homes by 2031, a chronic shortage of qualified people to run new condo buildings threatens to drive up costs for homeowners even as new units finally come online.

Changes to how condo managers are trained and licensed hit a key milestone in the summer of 2022, with new demands forcing many experienced managers in Ontario to retire.

Industry experts say the unfortunate combination of losing some of their best managers just as efforts to bring more housing online and deliver thousands of new units show signs of leading to a cost crunch.

“The demand for educated managers is just skyrocketing and the supply is plummeting; that’s kind of created the issue we’re in now,” Eric Plant, president of the Association of Condo Managers of Ontario, told Global News.

The shortage of experienced condo managers has meant higher wages — with some starting their first jobs at as much as $80,000 per year — and, ultimately, higher annual fees for condo owners.

On top of historic mortgage rates and years of inflation, the situation is squeezing homeowners in a cost of living crisis, Plant said.

“It’s hitting people very hard; it’s not helping the affordability crisis,” he said.

“The worst thing you can hear when your mortgage has just gone up and you’ve gone from two per cent to seven per cent is to get a letter from your condo manager saying we’re going up six per cent this year, 10 more per cent. It’s a lot to swallow.”

The condo industry saw some of its first major regulation at the end of 2017, when the then-Liberal government passed Condominium Management Services Act, which introduced regulations for condo managers for the first time.

The changes brought in a regimented system of licences for condo managers, who can be responsible for millions of dollars in budgets and running the country’s fourth level of government, condo boards.

“The industry had had a lot of problems, there were some major, major cases of fraud and other things that made the news and sort of prompted this,” Plant said. “So, no one in the industry was upset this happened.”

The new rules introduced different licences: junior qualifications for new entrants, general licences for managers and a transitional licence, which effectively grandfathered in those who had worked in the industry for a long time and weren’t going back to school to get a new qualification.

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The transitional licence, however, had an expiry on it and halfway through 2022, most of them ran out. Rather than going to get retrained, Plant said he found a huge number of the most experienced condo managers in the province left the industry altogether.

“I don’t know the percentage — there were no stats on this — but we lost a substantial portion of our most senior people in the industry overnight,” he said, guessing the number is somewhere between 10 and 25 per cent.

The most recent annual data from the Condominium Management Regulatory Authority of Ontario shows that there were 2,533 general licences, 1,611 junior licences and nine remaining transitional licences as of March 31, 2023.

The 4,564 licensed condo managers in Ontario have to run roughly 12,690 condo buildings with more than 900,000 units in them.

“That kind of killed us on the supply of condo managers side,” Plant said.

As the supply of managers showed signs of drying up, the supply of new units continued apace.

In 2023, a total of 11,422 new apartment units broke ground in Ontario, with 13,245 new units beginning construction in the first quarter of 2024.

Not only are more homes coming online, but Plant said the new condos bring in more components than older buildings, giving managers an extra factor to contend with.

“The buildings being built now are far more complicated,” he said. “They’re being mixed with commercial, there are hotels in them, there’s short-term rentals, there’s really complicated sharing facilities. The more in the middle of the city you are, the more complicated it gets.”

Anne Burgoon, a property manager and the vice president of Eastern Ontario Property Management, told Global News the combining factors complicate finding qualified new managers.

“There’s quite a challenge in hiring managers,” she said.

Burgoon, like Plant, said the manager shortage and glut of new buildings have driven up pay.

“They make good pay,” she said. “They’re making really good money.”

Plant said that an entry-level administrator working in an office on condo files would have earned $40,000 annually two to three years ago. They are now being hired at between $60,000 and $80,000.

“When you have this kind of economic mismatch, your prices go up and the prices of managers have skyrocketed,” he said.

“Three years ago, I was paying half of what I am paying for a limited junior licence. Now, it’s probably gone up between 50 and 100 per cent in three years.”

Burgoon said that senior managers, who can be in charge of between 2,000 and 4,000 units in her experience, could net salaries between $120,000 and $220,000 per year, “depending on your portfolio.”

But while the price of condo managers is going up, so are the tasks they are expected to handle. With as much as a quarter of experienced staff now out of the industry, Plant said junior managers were being put into difficult positions at times.

“Because of the shortage, you have junior managers running a lot more than they should be running under a lot less supervision. … We’re doing all we can to train as fast as we can, to make sure the ratios are good, but the reality is what it is,” he said.

“If you’ve got a junior building and you’ve got lots of buildings and you need someone to run them, you’re going to be putting that person into probably a bigger portfolio than they can handle.”

The ultimate result of the shortage, industry experts say, is that condo fees are going up.

As the management companies that match newly qualified managers with the condo buildings and the boards that need them have to pay higher salaries, they raise the costs of their contracts and condo boards raise their fees.

“Prices have gone up and what that means is the prices for the homeowners have gone up because they’re paying our management contract,” Plant said.

While the cost of a condo manager is relatively low in the context of the total condo fees a unit owner has to pay, other costs are also increasing. Replacement parts for buildings, particularly windows, are rising rapidly, while condo owners in older buildings find themselves facing more critical repairs.

“Building costs have gone up significantly but management fees have gone significantly as well because of all of this and the challenges we’re having keeping staff,” Burgoon said.

Neither Plant nor Burgoon said they were expecting the provincial government to offer an immediate solution to the cost crunch, hoping that the high salaries and more structured training would lead to more graduates over time.

“They built an organization from scratch. … These regulatory bodies were not there, so they built them from scratch over time. And have there been bumps and things to iron out? Yes. And will they continue to do so? Yes, I imagine that they will,” Burgoon said.

A spokesperson for the province told Global News that neither the government nor its regulatory body “have a role in setting condo managers’ salaries” in Ontario.

“The government is aware that, across the country, the growth in condo housing in recent years has resulted in an increasing need for condo management,” they said, promising the government would “continue to monitor trends” in the industry.