Saving up for a New York City apartment is a lofty goal—CityRealty listings show that the median asking price of a Manhattan condo is $2,666,309—and the down payment is just the beginning. Even if a person is lucky enough to buy their new condo outright and avoid some surprise charges, they must still pay common charges and real estate taxes, the combined total of which can rival some mortgage payments, the entire time they're living in the apartment. This article takes a look at how the price of common charges is determined, what they cover, and how to avoid making excessively high monthly payments.
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What Common Charges Cover
In condos, tenants pay common charges, which cover many of these same things as co-op fees (e.g., maintenance of common areas such as the lobby and hallways, pest control, trash, and snow removal, etc.). But there is one notable difference: Common charges don’t cover property taxes. As a result, common charges are often lower than co-op fees. However, this doesn’t necessarily mean that one ends up paying lower fees in a condo. Once the taxes are taken into account, one’s combined taxes and common charges can be much higher than one’s co-op fees. Of course, it depends on the building and the building’s range of amenities — a boutique condominium in Brooklyn is likelier to have significantly lower common charges than an amenity-rich supertall.How Common Charges Are Set
Common charges are set based on the size (and in some cases, also the location) of one’s unit. In essence, the condo unit’s “percentage of common interest” (a variable usually based solely on square footage) is multiplied by the cost of the included operating costs. Therefore, the bigger the unit, the higher the fees.Common charges are also subject to change over time. Higher fuel costs, major repairs to common areas in the building, and new services will all impact one’s fees. Like co-op boards, condo boards may also levy assessments to cover the cost of major projects, including façade repairs.
Negotiating Common Charges
If your common charges spike, there is not much you can do. In fact, even if you purchased in a new building and were led to believe the common charges would be considerably lower than they are, you may have little or no way to take action. What’s clear is that failure to pay your common charges is never a good idea. Condo boards are empowered to take legal action to ensure they can collect any common charges in arrears. Again, if a condo owner who believes their building’s common charges are too high, the best line of defense is to get involved in the building by running for the condo board.Finding Low Common Charges
While there is rarely much one can do to lower their common charges, condo owners have long had one recourse that co-ops don't: From time to time, tax abatements can help lower monthly fees. The most common abatement is the 421-a tax abatement. The program, which dates back to the early 1970s, was created as an incentive to motivate developers to use underused land. In return, developers were given tax cuts, which were, in turn, passed along to owners in the form of dramatically low costs.Most 421-a tax abatements lasted for ten years, but a 2006 initiative offered some developers a 20-year abatement if they also agreed to add affordable units to their development. For this reason, although the 421-a tax abatement program expired in June 2022, there are still a small handful of buildings in New York City where prospective buyers can take advantage of the abatement.
As New York's elected officials negotiate a possible renewal or replacement for 421-a, condo developers have cottoned on to the high costs of common charges and how this might be a deterrent for potential buyers. As such, some have sought to sweeten the deals by offering reduced common charges or a certain period of free common charges. As appealing as this may sound, it is important to note that it will not last forever, and the eventual common charges should be included in one's budget.
Tax Abatements, Sponsor Incentives, and Other Offers to Lower Monthly Costs
13 availabilities from $750K
Sponsor will pay 12 months of estimated common charges and real estate taxes for purchasers who fully execute a binding contract prior to 2/28/23 at midnight
8 availabilities from $610K
Purchasers will be provided a credit against the purchase price of the apartment at closing in the amount of five years’ worth of (50%) of the projected real estate taxes for the first year
9 availabilities from $1.095M
Sponsor to pay one year of common charges and taxes
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14 availabilities from $1.05M
Two-year common charge credit on two-and three-bedroom units
18 availabilities from $765K
Two years of common charges paid on new contracts signed by 1/31/23
3 availabilities from $950K
Tax abatement expiring in 2035
6 availabilities from $5.5M
Tax abatement until 2038
19 availabilities from $1.23M
20-year tax abatement
Would you like to tour any of these properties?
Just complete the info below.
Or call us at (212) 755-5544
Would you like to tour any of these properties?
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