Victorian-based land lease community operator Lifestyle Communities will introduce a no exit fee contract option in the second quarter of FY26, giving customers the choice to pay more upfront in exchange for avoiding deferred fees on exit.
The move follows what CEO Henry Ruiz (pictured) described as a recent “listening tour” across the company’s communities.
"The other thing that we learnt off the listening tour is that for our existing homeowners that we have today, some of them have indicated interest in moving to a similar contract to what we are offering our new homeowners (4% of the purchase price for each year in the community, capped at a maximum of 20% after five years). That being they still have a deferred management fee, but they're interested in it being based off their purchase price," Henry told The Weekly SOURCE.
Results hit by VCAT ruling
The announcement comes as Lifestyle Communities reported an FY25 operating loss of $195.3 million, compared to a $50 million profit the year before.
The result includes a $54.5 million after-tax provision to repay deferred management fees (DMF) collected from past homeowners, and a $135.5 million write-down in property values following a Victorian Civil and Administrative Tribunal (VCAT) ruling.
Justice Ted Woodward found that while the state’s Residential Tenancies Act 1997 does not prohibit DMFs, Lifestyle’s contract clause was void due to inadequate disclosure of the precise exit fee payable. Lifestyle has appealed the decision but has already amended its contracts.
Operating profit after tax was $45.2 million (FY24: $52.9 million), with revenue down almost 11% to $163 million.
Market recovery signs
Shares in Lifestyle Communities closed 14.9% higher at $5.93 following Thursday’s results, though still well down on the $12.57 peak in July 2024 when an ABC 7.30 report raised concerns over its operations. Its market cap has dropped from $1.53 billion to $721.9 million.
Henry said sales have rebounded strongly in the second half of the year, with 98 new homes sold compared to 41 in the first half. The company has 237 contracts on hand, 162 of which relate to homes scheduled for settlement in FY26.
Positioning for the next cycle
Lifestyle will build 738 homes across its existing communities and has executed contracts to sell four land parcels at Merrifield, Drysdale, Ocean Grove and Warragul, expected to recoup $114.1 million over the next six to 12 months.
The first residents have also moved into its Ridgelea community, 53km southwest of Melbourne’s CBD.
Henry said the operator is now focused on preparing for the next growth phase., which they expect to emerge in late FY26 and early FY27 as the Victorian property market conditions improve.
