Lifestyle Communities will offer all existing homeowners the option to switch to its revised Deferred Management Fee (DMF) model once the Victorian Civil and Administrative Tribunal (VCAT) appeal is resolved, regardless of the appeal’s outcome. Lifestyle Communities develops and manages land lease communities, offering affordable housing options for retirees. The company focuses on providing lifestyle-oriented communities with various amenities and services.
The company changed its DMF structure for new residents in July after a VCAT ruling deemed pre-July 7 agreements invalid. The original fee structure, calculated as a percentage of the future sale price, was deemed indeterminable upon entry. The new model bases the DMF on the original purchase price, capped at 20 per cent and accrued over five years.
VCAT’s finding led Lifestyle Communities to write down the DMF component of its investment property values to zero as of June 30. The company has been assessing whether to extend the new model to existing homeowners and reports receiving positive feedback during consultations. Offering the change after the appeal concludes will allow homeowners to make an informed decision, improve goodwill and sentiment, and support referral-driven sales, which historically account for up to half of all sales.
The carrying value of DMF assets will be adjusted as homeowners elect to move to the new model. If all residents as of June 30 opted in, the company estimates the potential adjustment could be up to $117 million.
