If you are looking for a condo in Calgary, particularly in the downtown and Beltline areas, you may have come across the term Post-Tension Cables (PTC).
This was a construction style that was very common in the 1970’s and 1980’s in Calgary and was used in high-rise, concrete-construction condos. Steel cables inside of plastic tubing are pulled to a high tension inside the concrete slabs to allow for more strength over larger distances.
Please note that although this is primarily in concrete condos, I have seen a few instances of wood frame buildings that have one concrete slab above the parkade level that includes PTC.
The reason this is primarily seen in the downtown area is because it’s the only place that has a lot of high-rise condos built in that era. The suburban communities that were being developed in the 1970’s and 1980’s (think Huntington Hills in the north, Canyon Meadows in the south, etc.) didn’t have zoning that allowed for high-rise buildings, so if condos were built in those areas, they were typically low-rise condos or townhomes that were wood-frame construction.
The benefit to PTC is longer spans with no pillars, which is lovely as far as interior condo floor plans go!
The danger to this is if the cables start to corrode.
Over time, this corrosion became a more common issue and condo corporations started having to spend more money monitoring and repairing/replacing the cables. Most PTC buildings now are on a monitoring schedule, where a qualified company will check the condition of the cable strands on a regular basis (sometimes every 5 years but could be as often as every year) and make recommendations.
As a result of this, condo corporations (and in turn, individual owners through their condo fee) have to spend more money, both on the monitoring and the replacement of strands. This is the main reason why PTC buildings often have higher condo fees than non-PTC buildings!
Remember that condo corporations are made up of the owners of the individual condos and a condo board is made up of volunteer individuals with their own busy lives, just like you and me. Yes, they usually have the help of a property manager, but it is the volunteer owners that have to make the decisions about the condo. Sometimes not enough time or effort is put into running the condo proactively and there may be a very large PTC repair bill that could result in a special assessment (cash call) being levied to all owners.
One other major thing to know about buying in a PTC building is the financing side of things. I asked Sharlene Scott of Mortgage Line to tell us more.
A majority of lenders in today’s market do not feel comfortable approving a mortgage on properties with Post Tension Cables.
Some lenders will consider approval on a case-by-case basis. It is imperative when writing an offer for any property with PTC that you are aware that your mortgage lender options are limited. At the time of writing, only about four lenders will consider PTC, whereas buyers would have 20+ lenders to choose from for non-PTC buildings.
For non-PTC buildings, if your down payment is less than 20%, you will be required to pay mortgage insurance. Unfortunately with PTC buildings, you require mortgage insurance regardless of whether the down payment is higher or lower than 20%. The three mortgage insurers in Canada are CMHC, Canada Guaranty or Sagen. At the time of writing Sagen will not insure such properties. Canada Guaranty may approve on exception.
So, for a PTC building, you require both one of fours lenders and one of two mortgage insurers to approve the building.
A potential buyer should request all condominium documents, and the most recent Engineer’s Report up front. Have these documents reviewed by a qualified Condominium Document Specialist who can review and offer their opinion on the overall financial health and management of the building. The lender will require the condominium documents together with the Engineer’s Report which will be reviewed by them as well.
The Condominium Corporation must be performing regular maintenance on the building, including having the Post Tension Cable system regularly monitored by an Engineer and performing recommended maintenance. The Condominium Corporation must also have adequate reserve funds to handle future expenses to avoid any special assessment.
Because it’s more difficult to get financing on a PTC building, this can limit the pool of buyers that you can sell your condo to in the future. With less demand for your type of condo, prices typically suffer.
This is why you will see many 1970’s and 1980’s condos on the market that look like a pretty great deal!
All of this is not to say that PTC buildings should be an absolute deal-breaker for you. There are so many factors that influence an individual’s needs and priorities. It can be an opportunity to buy a spacious condo in a great location for a very attractive price! Plus, some PTC buildings are very well managed.
People I would recommend PTC for:
- someone with a lower budget that wants to stay inner city
- someone that wants to buy in a certain building (i.e. because a family member also lives there)
- ideally someone with more than 20% down or paying cash
- someone that is looking to stay in their condo for a long time and is not as concerned with resale
- someone that could take their time to sell the condo when the time comes, in case the market isn’t strong and PTC buildings are having a hard time selling
- someone that is buying an investment property and can improve their monthly cash flow due to the lower purchase price
- someone that has experience being on a condo board and can contribute positively to the way the building is being run
People I would not recommend PTC for:
- someone with little monthly cash flow left after purchasing a condo – this doesn’t give you a buffer in case there is a cash call
- someone concerned with resale value
- someone that may need to re-sell the condo within 3 years
- someone that may need to re-sell the condo quickly (i.e. someone who regularly gets transferred for work, etc)
- someone that has a hard time getting approved for a mortgage anyway (i.e. poor credit, too much debt, etc)
- someone that doesn’t take the time to understand the risks associated with PTC buildings
To talk more about whether a post-tension cable building is right for you, give me a call!