Advocacy & Rights
Retirement village operator to refund $78m over unlawful exit fees
Advocacy & Rights
Retirement village operator to refund $78m over unlawful exit fees
Advocacy & RightsPolicy & LegislationPricing & Funding
The Senior · 5 min read · 1 day ago
Original source
Summarised by Stellar
Key points5 points
- Lifestyle Communities must refund between $80,000 and $160,000 to each eligible current or former resident, including deceased estates, with a $78 million provision administered by Deloitte.
- The Court of Appeal upheld VCAT's finding that calculating exit fees as up to 20% of a future sale price, using the higher of market or average value, breached the Residential Tenancies Act because residents could not understand their liability before sale.
- Existing contracts will no longer carry deferred management fees, and new residents will pay a fee based on the original purchase price, shifting capital growth to the resident.
- Victorian amendments to the Retirement Villages Act passed in May 2025 now require operators to explain exit fee calculations to residents, raising disclosure expectations across the sector.
- The case highlights the risk that opaque exit fees can trap residents in villages or delay moves into aged care, with potential refunds extending to beneficiaries of deceased estates who may not know they are eligible.
Summary
Lifestyle Communities will refund up to $78 million to current and former residents after the Victorian Court of Appeal upheld a VCAT finding that its deferred management fee formula breached the Residential Tenancies Act. The court found residents could not know their exit liability until after their home sold. The operator has dropped the DMF model for existing and new residents, with refunds administered by Deloitte. Providers should review exit-fee transparency and contract disclosure obligations.