How Depreciation Reports Impact Property Value in Comox: An Important Factor for Strata Owners

When assessing property value, location and amenities are key. For strata properties, another crucial factor is the depreciation report or reserve fund study.

With BC’s updated regulations, all stratas must now update their depreciation reports every five years. Beyond compliance, these reports impact property values, buyer confidence, and financial stability in the following ways:

Lenders Prefer Properties with Financial Transparency

• Buyers aren’t the only ones reviewing depreciation reports; lenders do, too. Before approving a mortgage, banks assess the strata’s contingency reserve fund (CRF) and long-term financial planning.
• Stratas with well-funded reserves and updated reports are considered lower lending risks. Stratas with missing or outdated reports create higher buyer hesitation and financing challenges.
• Impact on property value: Properties in financially stable stratas sell faster, while those in underfunded buildings may struggle.
• Buyers Feel More Confident Investing in Well-Managed Stratas
• Today’s buyers and their agents scrutinize strata documents before making an offer. If a depreciation report reveals financial gaps, it can deter buyers or lead to price negotiations.
• For example, if a buyer learns that a $500,000 roof replacement is due soon but the CRF is underfunded, the risk of a special levy makes the purchase less appealing.
• Impact on property value: Stratas with clear maintenance plans and stable finances attract stronger buyer interest.

Strata Owners Avoid Unexpected Special Levies

• A depreciation report maps out long-term maintenance costs, preventing sudden financial shocks. Without it, owners risk large or unexpected levies for emergency repairs.
• Poor planning leads to higher financial stress for owners and reduced resale value.
• Impact on property value: Strata properties with proactive financial planning are more marketable and financially stable.
• BC’s New Strata Laws: Compliance = Market Trust

As of July 1, 2024, all BC stratas must update depreciation reports every five years.

Deadlines:

• Metro Vancouver, Fraser Valley, Capital Region: Due by July 1, 2026
• Rest of BC: Due by July 1, 2027

Impact on property value: Stratas that stay compliant maintain buyer confidence and prevent financial risks.

Final Thoughts About Depreciation Reports and Property Value in Comox

A depreciation report isn’t just a legal requirement. It’s a financial roadmap that protects property value. Strata corporations can use it as a maintenance guideline and be proactive about repairs and replacement of assets. Get in touch with me to learn more!

1. Strata councils and property managers: Is your depreciation report up to date?
2. Buyers and real estate professionals: Have you seen depreciation reports influence property values?