AceBusinessDesk – Lifestyle Communities shares plunged more than 18 per cent in the wake of an ABC investigation detailing claims the operator of gated communities for the over 50s is gouging residents with unfair fees, including charging the dead rent.
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Investors slashed more than $200 million off Lifestyle’s share market value after 7.30 revealed 80 home owners in a Lifestyle community in Wollert, on Melbourne’s northern fringe, had lodged claims in the Victorian Civil and Administrative Tribunal (VCAT) over fees they believe are unfair and in breach of the law.
In response to the story, the Victorian government said it would strengthen protections for Victorians living in land lease communities, where residents buy the home and rent the land it sits on.
The state’s Minister for Consumer Affairs, Gabrielle Williams, said she was developing a series of reforms, including a standardised site agreement for all residents.
Ms Williams said the Commissioner for Residential Tenancies would lead a research project to “better understand issues impacting residents” in partnership with the Consumer Policy Research Centre, and provide a report to the government by the end of the year.
“We’re strengthening protections for residents and working with them to understand their concerns better,” Ms Williams said.
“I want as many residents and park operators as possible to participate in our research – so we can make sure we’re delivering the protections that residents need and deserve.”
Lifestyle is part of a booming $12 billion industry, which houses more than 130,000 residents across the country.
A major source of revenue for the company is its exit fees, which are calculated on the sale of the home.
Lifestyle’s exit fees start at 4 per cent and scale up to a cap of 20 per cent from the fifth year of ownership.
A house that sells for $500,000 after five years leaves the resident with $400,000.
Lifestyle’s contracts state that when a person dies or leaves the community, they or their estate have to keep paying rent until the house is sold, which can take months or years.
Lifestyle declined to be interviewed for the story but in response to a series of questions said its contracts were legal and it put residents first.
Exit fees are banned or highly regulated in other states, but not in Victoria.
Housing for the Aged Action Group chief executive Fiona York said she believed exit fees were likely to be illegal.
“These often-exorbitant fees make it extremely difficult for older people who have purchased properties in these communities to leave,” she said in a statement.
Ms York called on the Victorian government to introduce a series of measures to better protect older people in retirement housing from exploitation and abuse.
They include establishing a retirement housing ombudsman, putting a stop to excessive fees, addressing complex and ambiguous contracts and involving residents in any reform process.
“Gaps in Victoria’s consumer protection laws and access to justice frameworks are destroying some older people’s ability to enjoy a happy retirement,” she said.
“The government is aware of the issues in land lease communities and has made it a regulatory priority. We look forward to working with them to fix this for residents. But these issues have persisted for far too long.”
In response to a series of questions, a spokesperson for Consumer Affairs Victoria said it took allegations of breaches of the Residential Tenancies Act seriously and would investigate and take further action where required.
“We encourage any residents with concerns about Lifestyle Communities or any other residential park operator to contact Consumer Affairs Victoria,” the spokesperson said.
Retired policeman Geoff Gauci, a resident at Lifestyle, is leading the uprising against the company.
“To me, it’s like I’m in a financial prison,” Mr Gauci said.
“I’ve got to bail myself out in order to get out, and it’s just wrong.”
In a statement to the ASX, Lifestyle Communities said it “rejects the allegations made in the VCAT applications, and will defend them accordingly”.
It said exit fees were permissible in all states except South Australia.
“In Victoria, most land lease operators charge a deferred management fee.”
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