Introduction: A Game-Changing Decision for Victorian Retirement Housing
On 7 July 2025, Victorian Civil and Administrative Tribunal (VCAT) President Justice Ted Woodward delivered a landmark ruling that fundamentally challenges the business model underpinning Victoria’s land lease community sector. In proceedings brought by over 80 residents of the Wollert Lifestyle Community against Lifestyle Management 2 Pty Ltd, Justice Woodward found that the company’s exit fee structure violates the Residential Tenancies Act 1997 (Vic) and that certain contractual provisions are unconscionable [1].
This decision represents more than a victory for the Wollert residents—it establishes crucial precedents for Victorian tenancy law and consumer protection in retirement housing. For legal practitioners and retirement housing operators across Victoria, the implications are profound and immediate.
Understanding Land Lease Communities Under Victorian Law
Land lease communities, regulated under Part 4A of the Residential Tenancies Act 1997 (Vic), are a popular form of retirement housing where residents purchase demountable dwellings but lease the land beneath them [2]. This model has grown significantly across Victoria, with operators like Lifestyle Communities developing multiple sites throughout the state.
The legal framework governing these arrangements centres on Residential Site Agreements (RSAs), which set out the rights and obligations of both residents and operators. These agreements typically include provisions for site rent, various fees and charges, and importantly for this case, exit fees calculated as a percentage of the sale price when residents leave.
The Legal Challenge: Sections 206S and 206G Under Scrutiny
Section 206S: Victorian Disclosure Requirements
The residents’ challenge focused primarily on section 206S of the Residential Tenancies Act 1997 (Vic), which governs rent, fees and charges under site agreements. This provision requires that agreements must include “the amount of the rent, fees and other charges payable under the site agreement” [3].
Critically, section 206S(2) provides that “A site owner must not require payment of any amount under the site agreement if the amount has not been disclosed in the site agreement in accordance with this section.”
Justice Woodward’s interpretation was decisive: the requirement for disclosure of “the amount” cannot be satisfied by a percentage-based calculation where the final sum remains unknown until sale. This strict construction reflects Victorian consumer protection principles demanding clear, upfront disclosure of financial obligations.
Section 206G: Unconscionable Terms in Victorian Tenancy Law
The second pillar of the challenge relied on section 206G, which empowers VCAT to declare invalid or vary terms that are “harsh or unconscionable” [4]. Justice Woodward found that requiring deceased residents’ estates to continue paying rent whilst being unable to occupy the dwelling was “harsh, if not unconscionable.”
The remedy applied was innovative: varying the RSAs to allow estates to sub-let properties before sale, providing a mechanism to offset ongoing rental obligations whilst addressing the unconscionable burden on bereaved families.
Immediate Impact on Victorian Retirement Housing
Financial Consequences for Lifestyle Communities
The decision’s immediate impact on Lifestyle Communities Limited (ASX: LIC) is substantial. The company disclosed that exit fees represent approximately $250 million of its asset base, making Justice Woodward’s ruling potentially catastrophic for its business model [5]. Share prices reflected this reality, declining significantly following the decision’s announcement.
Lifestyle Communities responded by announcing its intention to appeal whilst simultaneously updating contracts for new residents to comply with the identified disclosure requirements [6].
Broader Implications for Victorian Operators
The ruling affects all 24 operating Lifestyle Communities in Victoria and potentially other operators employing similar exit fee structures. The decision establishes several important precedents for Victorian tenancy law:
Strict Disclosure Standards: Consumer protection legislation will be interpreted strictly in favour of residents, with no tolerance for ambiguous disclosure.
Unconscionability Benchmarks: The finding provides guidance on unconscionable conduct in retirement housing contexts, particularly regarding deceased residents’ estates.
Remedial Innovation: VCAT’s willingness to craft creative solutions demonstrates the tribunal’s commitment to achieving equitable outcomes under Victorian law.
Consumer Protection Under Victorian Law
Strengthening Resident Rights
From a consumer protection perspective, Justice Woodward’s decision significantly strengthens resident rights in Victorian land lease communities. The strict interpretation of disclosure requirements ensures residents receive clear, upfront information about financial obligations, enabling informed decision-making.
The unconscionability finding addresses particularly egregious conduct where grieving families faced ongoing rent obligations for properties they couldn’t occupy or derive income from—exactly the type of harsh conduct that Victorian tenancy law seeks to prevent.
Precedential Value for Victorian Legal Practice
The decision provides Victorian legal practitioners with powerful precedents for challenging unclear fee structures or unconscionable contractual terms in retirement housing. The principles established will likely influence other retirement housing arrangements across Victoria, including retirement villages and seniors’ accommodation.
Industry Response and Compliance in Victoria
Immediate Compliance Requirements
Victorian retirement housing operators have responded swiftly, reviewing contractual arrangements and fee structures to ensure compliance with Justice Woodward’s interpretation of disclosure requirements. Many operators charging percentage-based exit fees face fundamental challenges to their business models.
Some have moved to fixed-fee structures, whilst others seek to restructure arrangements to comply with disclosure requirements whilst maintaining revenue streams. The traditional model of using exit fees to subsidise upfront costs may no longer be viable in its current form under Victorian law.
Long-term Structural Changes
The decision will likely drive longer-term structural changes in how Victorian retirement housing is financed and operated. This may result in higher upfront costs for residents, increased ongoing fees, or alternative financing arrangements that comply with Victorian disclosure requirements.
Legal Practice Implications in Victoria
Advising Victorian Retirement Housing Operators
For legal practitioners advising Victorian retirement housing operators, Justice Woodward’s decision necessitates comprehensive review of existing contractual arrangements. The strict interpretation of disclosure requirements means any fee that cannot be precisely quantified at agreement time may be unenforceable under Victorian law.
Practitioners must advise clients to ensure all fees are clearly disclosed in specific dollar amounts, with variable components structured to comply with section 206S requirements. The unconscionability finding also requires careful consideration of terms that might impose disproportionate burdens on residents or families.
Representing Victorian Residents
For practitioners representing residents in Victorian retirement housing disputes, the decision provides powerful tools for challenging unfair arrangements. The strict disclosure requirements create opportunities to challenge fee structures previously considered legally sound under Victorian tenancy law.
The unconscionability finding expands scope for challenging harsh or unfair terms, with the decision’s emphasis on resident vulnerability providing strong foundations for future challenges under Victorian law.
Appeal Prospects and Future Victorian Developments
The Appeal Process
Lifestyle Communities’ announced intention to appeal ensures these legal issues will receive further judicial consideration. The appeal will likely focus on section 206S interpretation, unconscionability application to commercial arrangements, and the appropriateness of remedial orders under Victorian law.
The outcome will be closely watched by Victoria’s retirement housing sector and consumer advocates. A successful appeal might restore the status quo, whilst an unsuccessful appeal would cement Justice Woodward’s principles and strengthen their precedential value in Victorian jurisprudence.
Potential Legislative Response
The decision may prompt Victorian Government review of the regulatory framework governing land lease communities. Potential reform areas include clarifying disclosure requirements for exit fees, enhancing consumer protections, and standardising contract terms across Victoria’s retirement housing sector.
The Government’s response will indicate whether legislative intervention is considered necessary or whether the existing framework, as interpreted by Justice Woodward, adequately protects Victorian residents.
Conclusion: A New Era for Victorian Retirement Housing Law
Justice Ted Woodward’s decision represents a watershed moment for Victorian retirement housing regulation. By strictly enforcing disclosure requirements and applying unconscionability principles, the decision establishes that operators cannot rely on complex or opaque contractual arrangements to extract fees without proper disclosure and fair dealing under Victorian law.
The decision’s impact extends across multiple dimensions: immediate financial consequences for operators, enhanced protection for Victorian residents, and important precedents for legal practitioners. The strict interpretation of consumer protection legislation prioritises substance over form, recognising particular vulnerabilities in the retirement housing population.
For Victorian legal practitioners, the decision provides valuable guidance on consumer protection principles in retirement housing contexts and demonstrates potential for creative remedial approaches to unconscionable conduct. The emphasis on clear disclosure and fair dealing establishes important benchmarks for advising both operators and residents in Victoria’s retirement housing sector.
As Victoria’s retirement housing industry adapts to this new legal landscape, the ultimate beneficiaries will be thousands of Victorians choosing land lease communities. The decision ensures access to clear financial information and protection from unconscionable contractual terms, representing a significant victory for consumer rights in Victoria’s growing retirement housing market.
The broader implications influence how we approach consumer protection, contractual fairness, and treatment of vulnerable populations in commercial relationships under Victorian law. Justice Woodward’s decision represents not just a legal victory for Wollert residents, but a reaffirmation of fundamental fairness and transparency principles that should govern all commercial relationships in Victoria, particularly those involving vulnerable consumers.
References
[1] Housing for the Aged Action Group, “Not just unfair, unlawful: VCAT rules against village charging Deferred Management Fees,” 9 July 2025, https://www.oldertenants.org.au/publications/not-just-unfair-unlawful-vcat-rules-against-village-charging-deferred-management-fees
[2] Consumer Affairs Victoria, “Site agreements in residential parks and villages,” 24 April 2025, https://www.consumer.vic.gov.au/housing/renting/starting-and-changing-rental-agreements/different-rental-agreements/site-agreements-in-residential-parks-and-villages
[3] Residential Tenancies Act 1997 (Vic) s 206S, https://www5.austlii.edu.au/au/legis/vic/consol_act/rta1997207/s206s.html
[4] Residential Tenancies Act 1997 (Vic) s 206G, http://www.austlii.edu.au/au/legis/vic/consol_act/rta1997207/s206g.html
[5] Australian Financial Review, “Lifestyle’s exit fees loss puts retirement estates on notice,” 9 July 2025, https://www.afr.com/property/commercial/lifestyle-communities-shares-plunge-after-tribunal-ruling-20250709-p5mdm4
[6] ABC Radio National, “Lifestyle Communities appeals exit fee ruling,” 8 July 2025, https://www.abc.net.au/listen/programs/radionational-breakfast/lifestyle-communities/105509634
About Hayton Kosky Lawyers
Hayton Kosky Lawyers specialises in Victorian property law, tenancy disputes, and consumer protection matters. Our experienced team provides expert legal advice on retirement housing, land lease communities, and VCAT proceedings across Victoria. Contact us for professional legal assistance with Victorian tenancy law matters.