The recent ABC investigation aired on the 7.30 program has ignited a firestorm of controversy around Lifestyle Communities, a prominent operator of over-50s gated communities in Victoria.
The expose detailed allegations of unethical practices, including exorbitant fees and the controversial policy of charging rent to deceased residents’ estates. The fallout has been swift and significant, with Lifestyle Communities’ shares plummeting by more than 18 per cent, wiping over $200 million off its market value.
Retired policeman Geoff Gauci, along with fellow residents Thom Meads and Steve Doudle, moved into Lifestyle Communities’ development in Wollert, drawn by promises of low-maintenance, resort-style living.
However, their dream quickly turned into a financial nightmare. Gauci likened his situation to being in a “financial prison,” as he and others discovered what they allege to be unfair and possibly illegal fees.
Among their grievances are the high exit fees, which can reach up to 20 per cent of the home’s selling price after five years, and the requirement for deceased residents’ estates to continue paying rent until the property is sold.
Industry Under Scrutiny
Lifestyle Communities is part of a booming $12 billion land lease industry that caters to over 130,000 Australians. The sector’s growth, driven by housing affordability issues and an ageing population, has attracted significant investment from major property players like Stockland, Mirvac, and GemLife.
Despite its substantial market presence, Lifestyle has largely flown under the radar until now. The revelations from the ABC’s 7.30 program have brought to light accusations of immoral and unethical conduct, with 80 residents at Wollert lodging a claim against the company with the Victorian Civil and Administrative Tribunal (VCAT).
The backlash from the investigation has not been limited to residents.
Investors, already uneasy after Lifestyle’s recent downgrade in new home settlements, were further alarmed by the company’s characterisation of single retired women as “Miss Lonely, Miss Homely, and Miss Active” during a May investor conference.
The resulting disquiet contributed to a sharp drop in Lifestyle’s share price, from $18 to $12.50. The company’s largest shareholder, AustralianSuper, has refrained from commenting directly on the issues but has expressed confidence in Lifestyle’s management to address the concerns raised.
Government Response and Calls For Action
In the wake of the investigation, the Victorian government has announced plans to strengthen protections for residents of land lease communities.
Minister for Consumer Affairs Gabrielle Williams outlined a series of forthcoming reforms, including the development of a standardised site agreement and a comprehensive research project led by the Commissioner for Residential Tenancies.
This initiative aims to better understand the issues affecting residents and ensure that the necessary protections are in place.
Fiona York, Chief Executive of Housing for the Aged Action Group (HAAG), has been vocal in her criticism of exit fees, which she believes are likely illegal under current legislation.
She has called on the Victorian government to introduce robust measures to protect older residents from exploitation. Among her recommendations are the establishment of a retirement housing ombudsman, the elimination of excessive fees, and clearer, more straightforward contracts.
The Human Cost
The human stories emerging from the investigation highlight the emotional and financial toll on residents. Dayle Callus, for instance, recounted how her mother-in-law’s estate was charged almost $12,000 in rent after her death, alongside a substantial exit fee.
Such policies, residents argue, are disrespectful and inhumane. Robert Humphris, another former resident, described the community as lacking the peaceful sanctuary it promised, eventually costing him nearly $100,000 to leave.
As the Victorian government moves to address these issues, the hope among affected residents is for meaningful reform that will provide better protection and transparency. For those embroiled in legal battles and grappling with financial loss, the resolution of their VCAT case could set a precedent for the industry.
The broader implications of this investigation may well lead to a reevaluation of practices within the land lease sector, ensuring that the promises of a serene and affordable retirement are more than just marketing spin.
My concern is for those of us needing to exit the community to go into aged care will be financially disadvantaged with ongoing fees while awaiting the sale of their homes. Which can take many months. It is not in tge companies interest to push for the sale of the home. They will still get their money.
It is time to investigate the way these villages operate. . We were lucky having moved out of ours. We lost in excess of $100,000 money that we could do with now. We were only in the village for a short time. It was not for us!
Have you looked at recent (6 June 2024) legislation Queensland which significantly improves the outcomes for owners of homes in lifestyle villages in Queensland – in excess of 250, I believe. I think the Victorians system could learn from our experiences here. Ross Grant