Lifestyle Communities’ date with destiny beckons

The Victorian land lease community operator, which has seen its market capitalisation fall 128% from June 2024, will appear in the Victorian Supreme Court on Tuesday (23 June).

Lifestyle Communities’ application for leave to appeal and appeals (if leave is granted) relate to the orders made by President Ted Woodward in the Victorian Civil and Administrative Tribunal (VCAT). The long-awaited case will be heard in the Court of Appeal on Tuesday, with the court to deliver its decision in due course.

Claims made to VCAT – first aired in an ABC 7.30 investigation in July 2024 and disputed by Lifestyle Communities – saw President Woodward rule that the operator’s DMF model was illegal because it was calculated in a way that benefitted Lifestyle Communities if home values increased – but did not penalise the operator if values declined.

Opinion: The law is an ass – it's cost Lifestyle Communities $1.5B and counting

In response, then-new Chief Executive Officer Henry Ruiz introduced an new upfront fee – buyers now have the option when they pay their management fee – either 10% upfront, or up to 20% when they sell.

All existing homeowners will be given the option to move to the Upfront DMF Model once the appeal to VCAT is determined, regardless of the outcome of the appeal.

In a FY26 Trading Update issued on Thursday (18 June), Lifestyle Communities said that in H2 FY26, just 13.3% of buyers of developing and established homes paid upfront.

The operator also recorded 209 new home sales year-to-date, a 50.4% increase from 139 new home sales recorded last financial year. Compare this to FY22 when Lifestyle Communities notched up 401 new settlements.

New home sales in the fourth quarter reached 56 units, rising from 43 sales in the third quarter. Unsold inventory homes fell by 53.2% to 126 homes as of May 31.

In addition, net debt was reduced by $182.8 million to $277.7 million as of 31 May.