Retirees saved from ‘financial prison’ in landmark decision against developer

Residents of a retirement village in Melbourne’s outer north have been saved from paying hundreds of thousands of dollars in “unfair” fees when they move out or die, after a landmark tribunal decision.

Justice Ted Woodward, president of the Victorian Civil and Administrative Tribunal, found on Monday that some residents of the Wollert Lifestyle Community were likely misled into a false understanding of how fees would be applied when they sold their homes and that certain fees should therefore be voided.

Wollert retiree Steve Doudle, with his wife Denise Colquhoun, said he felt vindicated after the VCAT decision against Lifestyle Communities’ deferred management fees.Credit: Luis Enrique Ascui

The tribunal heard that paperwork given to residents – some of whom pay upwards of $600,000 for their home plus fortnightly rent for the land – by retirement park developer Lifestyle Communities did not clearly spell out how much they would be paying under a “deferred management fee” when they eventually left the property.

The fee works out to be 20 per cent of the value of the property at the point it is eventually sold on. However, the tribunal heard that examples given to residents used values that were far below or exactly their own purchase price.

Woodward found that while deferred management fees were permitted, Lifestyle Communities’ residential agreements likely caused confusion when they should enable a buyer to accurately understand what they will ultimately have to pay.

“It is entirely possible that an unsophisticated reader of the tables could be misled into thinking that these state the actual amount of the [fee],” Woodward wrote in his judgment.

Credit: Pat Scala

Residents also won their fight against Lifestyle Communities for forcing families to continue paying residents’ rent after they died while being prevented from subletting the property to help cover the costs until the home is sold.

Woodward found this was “harsh, if not unconscionable” as settling an estate can take years, and determined vacant properties should be allowed to be leased.

The tribunal proceedings involved four cases from the Wollert village and one from Chelsea Heights, with Woodward saying that the outcome would indirectly affect other residents in a similar situation.

There have been more than 80 applications lodged by residents of Wollert against Lifestyle Communities since 2024.

Barrister Sam Hopper, SC, who argued on behalf of the residents together with junior counsel Eli Fryar, said the decision set a precedent with potential far-reaching consequences, as it was likely that people living in Lifestyle Communities’ 27 retirement parks – as well as those living in developments run by different operators – had similarly structured deferred management fees.

Lifestyle Communities is part of a booming land-lease industry that employs a model used by caravan parks. Retirees buy a home, often moveable, and pay regular rent for the land and general upkeep.

Hopper said: “For most of the residents, the home is their largest, if not their only, significant asset. So for a lot of people, the deferred management fee is 20 per cent of their net worth. In anyone’s world, that’s going to be significant.”

Steve Doudle, 71, said he bought his Wollert home – one of about 250 in the park – four years ago for $550,000 with his wife, Denise Colquhoun. They also pay about $510 in fortnightly rent to Lifestyle Communities. He was relieved by the outcome on Monday after dealing with much mental anguish.

“I feel vindicated for the derogatory and demeaning manner in which we’ve been treated,” Doudle said.

He said the deferred management fee was “unfair” in the way it was explained to them when they purchased, likening the developers to “pigs at the trough”.

“We are fairly basic people and in the emotive process of downsizing and moving to a new location, it was just information overload … They didn’t represent it properly.

“Once I had the full realisation of what it was and what the amount could be, it felt like a financial prison. It was taking money from our kids’ hands.”

A Lifestyle Communities spokesman said the company was reviewing the tribunal’s decision and considering its options, including a possible appeal.

“While we are pleased that Justice Woodward has found the concept of a deferred management fee is legitimate, we are disappointed with his finding that certain Lifestyle Communities’ agreements should be declared void,” he said.

“[We] will make a further announcement to the ASX before trading in its shares resumes on Wednesday.”

Housing for the Aged Action Group advocate Shane McGrath said deferred management fees had long been charged unfairly in many residential parks, often trapping retirees in their accommodation because moving became unaffordable.

McGrath said the tribunal’s judgment would have wide implications for current residents, while those who already paid such fees could be entitled to mount a compensation claim.

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