Leaving Lifestyle Communities alive
The company's founder James Kelly retired in December. His timing was exceptional.
The Victorian Civil and Administrative Tribunal detonated the share price of retirement park operator Lifestyle Communities on Tuesday, declaring a large part of its business model legally void.
For any grey nomads hiding in Rampart's audience, has Lifestyle Communities got a deal for you! It will sell you a modest dwelling, rent you the land under it, and then only charge you fees for the park's communal facilities when you leave (in a box). The fees are not a fixed dollar amount, mind you – they're calculated at 5 per cent per year, up to a maximum of 20 per cent, of the sale price of your dwelling upon departure.
It is those deferred management fees that have been deemed invalid by VCAT because the contract between the company and park residents is a residential tenancy agreement, and Victorian law requires a lease to specify the actual dollar amount – not a percentage of an unknown amount – that any lessee is liable for.
VCAT's ruling means that all historical deferred management fees of approximately $70 million need to be refunded – a dramatic shared windfall, mostly for the estates of these former residents. Of course, this could well be overturned on appeal and, indeed, Lifestyle Communities is seeking a court order for the refunds to be stayed pending its appeal.