Tribunal Ruling Could Reshape Retirement Housing Model

A major decision by a Victorian tribunal is set to change how retirement housing providers charge residents. Lifestyle Communities has been ordered to remove previously undisclosed exit fees, raising serious questions about the growing land lease housing sector.

Lifestyle Communities operates 24 retirement estates across Victoria. The Victorian Civil and Administrative Tribunal found the company breached tenancy laws. At issue were “deferred management fees” imposed on residents when they left or sold their homes. The tribunal ruled these exit charges were not clearly disclosed or quantifiable at the time of signing agreements, which made them legally invalid.

The dispute came after complaints from 83 residents across two estates in Melbourne. They argued the fees were excessive and poorly explained. Lifestyle’s model enables retirees to buy prefabricated homes while leasing the land beneath them. This arrangement has become more common as Australians face housing shortages and an ageing population. The company has sold homes to over 5,500 residents and is a leading player in Victoria’s $12 billion land lease sector.

The exit fees were based on 4% of a property's value for each year of residency, capped at 20%. However, the tribunal found the fee structure was unpredictable and tied to future property values. That meant residents could not know exact costs when signing contracts. The ruling stated that housing agreements must specify actual dollar amounts to be valid, not estimates or formulas involving future sale prices. Lifestyle can no longer charge these fees to affected residents.

This decision may serve as a key precedent at a time when more developers are entering the land lease market, including major ASX-listed firms. Some operators do not charge exit fees, and tenancy rules vary across different states. Although the tribunal did not ban exit fees entirely, it made clear that any such charges must be transparent and reasonable at the time a contract is signed. Lifestyle has paused trading on the ASX and is now reviewing the ruling and considering an appeal.

The tribunal also removed other controversial clauses, including rules that allowed the company to keep charging rent after a resident’s death. These rules also stopped others from occupying the home until it was sold. The tribunal found these contract terms placed unnecessary burdens on deceased estates. From now on, third parties may stay in the homes during the sale process, as long as Lifestyle does not unreasonably deny approval.

As Queensland and other markets continue to grow this form of housing, the tribunal’s decision highlights the need for clear and fair contract terms in retirement living. For both residents and operators, this marks a shift that could influence legal and financial expectations across the sector.

Source: Australian Financial Review, Open Briefing, Lifestyle Communities Market Announcement (PDF)