Key takeaways 

The Dowling decision marks a turning point in retirement housing law. By voiding resale-linked exit fees and criticising post-death rent obligations when occupancy was prevented, VCAT has clarified the disclosure requirements of the Residential Tenancies Act and strengthened consumer protection rights in Victoria’s land-lease sector. 

Although Lifestyle Management has signalled an appeal, it has already moved to amend its contracts, underlining the practical impact of the ruling.

Retirement housing operators should move quickly to review their agreements, and residents would be well advised to seek legal advice on how these developments affect their rights. 

The Wollert Lifestyle Community dispute 

A dispute was heard by VCAT after more than 80 residents from the Wollert Lifestyle Community, in Melbourne’s northern suburbs, lodged proceedings against Lifestyle Management 2 Pty Ltd, the operator of the community. With support from consumer advocates and legal representatives, the residents contested several terms of their site agreements. Central to the case was the deferred management fee (DMF), which functioned as an exit fee charged when residents sold their homes or left the community. 

Key findings 

Exit fees (Deferred Management Fees)

• Exit fees tied to a future resale price contravened s206S(2) of the Residential Tenancies Act –  

 (2) A site owner must not require payment of any amount under the site agreement if the amount has not been disclosed in the site agreement in accordance with this section. 

• That section requires all rents, fees and charges to be disclosed and capable of accurate calculation at the time the agreement is signed. 
• Because resale-based fees depended on future market values, they were not “known or knowable” at entry and were declared void. 
• Notably, the Tribunal did not prohibit exit fees generally – only those contingent on uncertain resale values. 

Rent after death

• The Tribunal did not invalidate rent charges to estates in all cases.
• However, Justice Woodward found it “at least harsh, if not unconscionable” to require rent when dwellings could neither be occupied nor sub-let.
• He observed that fairness requires agreements to permit occupancy or sub-letting, with consent not to be unreasonably withheld.
• Following the case, Lifestyle Communities announced it will cease charging rent to deceased estates — a voluntary change that goes beyond the Tribunal’s findings. 

Implications for operators

• Contract reform: Lifestyle has stated that future exit fees will be based on purchase price, capped at 20% over five years, rather than linked to resale values. 
• Revenue impact: According to media reports (not Tribunal findings), the shift may affect around $13 million in annual fee income and reduce asset values by up to $250 million. Lifestyle’s shares were temporarily placed in a trading halt following the decision. 
• Appeal: An appeal has been foreshadowed, so further judicial clarification is possible. 
• National influence: While binding only in Victoria, the decision will be persuasive nationally. Operators using resale-linked exit fees in other jurisdictions should urgently review their agreements for compliance with tenancy and consumer laws. 

Implications for residents and families 

• Greater transparency: All fees and charges must now be fixed and calculable at the time of entry. 
• Relief for estates: Families should not face ongoing rent obligations during probate when occupancy is barred. Lifestyle’s policy change provides further protection. 
• Consumer protection: The ruling strengthens the ability of residents and their families to challenge unfair terms and reinforces that operator profitability must be balanced against fairness and statutory safeguards. 

If you have questions about this case or would like your contracts reviewed, whether as an operator or a tenant, please contact us for tailored legal advice. 

Further information / assistance regarding the issues raised in this article is available from the author, Darren Marx, Partner or your usual contact at Moray & Agnew.