How often do HOA fees increase? Causes and tips for raising fees

What are HOA fees?

HOA fees are regular payments made by homeowners to fund the ongoing operation and maintenance of their community. These fees cover shared expenses like landscaping, lighting, insurance, amenities, and management services. In most communities, HOA fees are collected monthly or quarterly and represent each homeowner’s proportional share of the costs to run the association.

This article is not intended to and does not constitute legal advice or create an attorney-client relationship. Board members should consult their association’s attorney to discuss the legal implications of their decisions or actions prior to proceeding.
 

Are HOA boards allowed to increase fees?

Yes. HOA fees can increase when the board adopts a new annual budget that reflects rising costs, planned projects, or updated reserve needs. The authority to raise fees comes from the community’s governing documents and applicable Alabama HOA laws. These documents usually define how budgets are approved, how much fees can rise each year, and whether member approval is required.

Most associations have the legal right (and the obligation) to adjust fees when operating costs increase. If insurance premiums rise or utility bills grow, board members must account for those changes to keep the budget balanced. In that sense, fee increases aren’t arbitrary; they are a reflection of actual expenses and the need to maintain adequate funding for repairs, reserves, and services.
 

How often do HOA fees increase?

In many communities, HOA fees increase annually. The typical increase ranges from 3% to 5% per year, though the amount can vary depending on inflation, location, and the community’s financial health. How often HOA fees increase is largely tied to the annual budgeting cycle. Each year, the board reviews expenses, forecasts new costs, and sets a fee amount that keeps the budget balanced.

Some communities adjust fees only every few years to avoid frequent changes. However, deferring increases can cause problems later. When fees stay flat for too long, reserves can fall behind and large, one-time increases (sometimes called “catch-up assessments”) may become necessary. It’s generally considered best practice for boards to make small, predictable adjustments each year. A modest annual increase is easier for homeowners to absorb and keeps the association financially stable over time.

Governing documents may also set limits on increases. Some HOAs cap annual increases at a specific percentage unless owners vote to approve a higher amount. Boards should always follow their governing documents and consult management or legal counsel before finalizing an increase.
 

How to generate revenue to offset increases

Costs are rising everywhere, and community associations are feeling the pinch. Boards are routinely challenged to stay within budget due to rising maintenance and operational costs, reserve funding requirements and, in some cases, to comply with new regulations.

"Different communities have different approaches and strategies to deal with rising costs. To save money, we're seeing some associations categorizing ‘must-haves’ and ‘nice-to-haves,’ postponing purchases that can wait until it's feasible, while others have turned towards closely analyzing vendor contracts, along with their utility expenditures, for potential cost cutting."

Anh Nguyen, vice president at FirstService Residential

Not every budget solution comes from raising fees. Some associations generate additional revenue or reduce costs to slow down increases. Here are several practical options:

1. Review service contracts: Periodically review vendor agreements to confirm competitive pricing. Property managers can help solicit bids or negotiate renewals that reflect current market rates.
    
2. Implement cost controls: Routine preventive maintenance often prevents major repairs later. Simple actions like servicing HVAC systems or inspecting roofs annually can save thousands in long-term expenses.
    
3. Evaluate amenities: Amenities such as pools, gyms, or clubhouses may be underused but costly to operate. Boards can explore usage-based scheduling, energy upgrades, or rental fees for private events.
    
4. Leverage bulk purchasing programs: Some management companies offer bulk purchasing for waste collection, insurance, or maintenance materials, lowering costs for the entire association.
    
5. Increase efficiency: Converting to LED lighting, adding irrigation timers, or using digital document systems can lower recurring expenses over time.

While cost savings help, it’s rare that they offset every increase. Most communities still need to adjust fees gradually to stay in line with inflation and maintain reserves. Another opportunity to earn money is by confirming your bank is providing you with the best interest rates available, according to Nguyen.

"FirstService Financial partners with banks to provide higher yields for the accounts of the associations we manage."

Staffing expenses

Of the different cost-cutting opportunities available, there is one area where communities should exercise caution, and that is the area related to staff. Associations considering reducing resident-facing, maintenance and cleaning staff or staff hours to save money may want to reconsider.

"Cutting your headcount might solve the immediate need to keep costs down, but the long-term effect can result in greater expenses in the future due to less preventive maintenance. You may start to notice the effects a few months down the line when a hallway that only needed a few touch-ups to the paint now requires a completely new paint job. And by then, you’ll need to invest more money to catch up and get your community back to standard."

Anthony Gragnano, vice president at FirstService Residential

Rather than reducing staff you will need later, consider optimizing your existing headcount and staff schedules. Utilize your team's hours efficiently by understanding the needs of your community and the amount of staff and time needed to accomplish tasks.
 

Raising HOA dues the right way

So you’ve analyzed your budget for cost-saving opportunities, explored potential ways to generate income, and determined that you still need to raise dues. So how do you approach this?

For starters, understand that even the most well-run HOAs often find raising dues necessary to keep the organization running smoothly. And understand that residents can resist paying more in association fees.

Follow the tips below to raise dues without alienating your residents.

• Tip #1: Communicate regularly with residents about the association's financial situation. Keeping them informed is important to helping them understand how much things cost.
   
• Tip #2: Help residents understand what their HOA dues support and how the association uses these funds. Be completely transparent about why an increase is necessary and explain that dues pay for daily expenses and the ongoing maintenance of community assets.
   
• Tip #3: Raise the topic early to set the platform. Most communities understand that your goal isn’t to spend money you don’t have on things you don’t need. Keeping residents informed early means that when the increase is implemented, they will not be surprised by it.
   
• Tip #4: Rather than a large, unexpected hike, set smaller regular dues increases which are easier on homeowners financially and emotionally.
   
• Tip #5: In advance of the increase taking effect, give residents a 30-day notice in writing. Email, flyers, newsletters, websites, and board meetings are all excellent tools for communicating with residents.
   
• Tip #6: Routinely ask your residents for their opinion and feedback. Allow them the opportunity to tell the board what is important to them, and incorporate their feedback into your financial decision-making.

As a board member, your duty to the community includes protecting property values, and membership dues are an investment that assists in that effort. A good property management company will help you develop effective cost-cutting methods and identify ways your association can maximize revenue — and will effectively help you communicate HOA dues increases to your residents when necessary.

For more information on how a professional property management company can help your association save money, contact FirstService Residential today.