Lifestyle Communities has formally lodged its appeal against a July ruling that found its Deferred Management Fee (DMF) structure breached Victorian residential tenancy laws.
VCAT President Justice Ted Woodward had determined the operator’s model was non-compliant, sparking concerns across the $12 billion land lease sector.
On Friday, the ASX-listed operator confirmed it had filed appeal papers in the Victorian Supreme Court to the Court of Appeal.
“While the timeline for the determination of the applications is unknown, the company reasonably expects the process to take approximately six to 12 months,” Lifestyle Communities said in its ASX update.
The operator has already felt the financial impact of the ruling. In its FY25 results, Lifestyle Communities recorded a $54.5 million after-tax provision for repayment of DMF collected from previous homeowners and a $135.5 million after-tax write-down in the carrying value of its investment properties.
Following the decision, Lifestyle axed its exit fee and changed its DMF for new customers to be based on the purchase price (rather than the sale price), with 100% of any capital growth going to residents until the appeal outcome is known.
Chief Executive Officer Henry Ruiz told The Weekly SOURCE last month the company also plans to roll out a “no exit fee” contract option in Q2 FY26, allowing customers to pay more upfront to avoid deferred fees at exit.
Despite the legal uncertainty, Lifestyle Communities’ stock has recovered 20.3% since its FY25 results, trading at $5.42. Its shares were sitting at $12.57 in July 2024 when an ABC 7.30 investigation first raised concerns over its business model. The operator’s market cap has since dropped from $1.53 billion to $659.83 million.
In a further blow, the ASX confirmed today (Monday) that Lifestyle Communities has been removed from the S&P/ASX 200 Index.
