Retirement village contracts: “Standardisation doesn’t go hand-in-hand with innovation” (Tony Randello)

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Last week we introduced you to the LEADERS SUMMIT presentation by MinterEllison’s lead retirement living partner, Robin Lyons, on the accelerating change of village contracts.

Lendlease Retirement Managing Director, Tony Randello, joined Robin on the podium to firmly outline his views on the simple DMF model, today’s customer and Lendlease contract innovation.

(You can watch a 15-minute presentation HERE).

Tony explained that the village sector, when it comes to contracts, has been a ‘one trick pony’ while watching the market grow in the penetration decrease.

“Standardisation doesn’t go hand-in-hand with innovation.”

Over three years Lendlease invested heavily in market research, chasing down potential customers who had eventually said ‘no’.

He also pointed out that ours is the “only industry each transacts with one customer, but at the end it’s not that customer we deal with” (it’s the children).

“The market is large and asset wealth has increased dramatically – especially over the last 10 years –and people have an ability to pay that they didn’t beforehand and as an industry we have continued to respond to that with ‘here is the discount option, it’s the deferred management fee’, but we haven’t really given them the alternative to pay more and keep more”.

In June last year, Lendlease rolled out four contract options (pictured above), starting with a prepaid upfront 18% management fee, with the customer responsible for all transaction fees and refurbishment costs but receiving 100% of the capital gain. At the other end of choice Lendlease is offering ‘pay-as-you-go’.

This choice and transparency has led to confidence in the purchase by customers. Randello notes that “our salespeople love it”.

In the video he identifies the most popular option. Watch it HERE.