Landmark VCAT Ruling Reshapes Exit Fees and Rent for Deceased Residents in Lifestyle Communities

In a decision that could reshape the financial landscape of retirement living in Victoria, the VCAT has ruled against the operators of Wollert Lifestyle Community (Lifestyle) in a case that challenged the exit fees agreements and rent charged to deceased residents’ estates.

This case, brought forward by a group of residents, highlighted long-standing concerns about transparency in Residential Site Agreements (RSAs) used by Lifestyle Communities and similar operators.

Key issues:
Two key issues were central to this case.
1. Exit Fees: Residents were required to pay an exit fee calculated as a percentage of the sale price when they sold their homes. However, the exact amount of this fee wasn’t disclosed upfront as it depended on future sale price.
2. Deceased Rent: The RSAs stipulated that when a resident passed away, their estate must continue paying rent until the house was sold, even though no one could live in the home during that period.

The Ruling:
On July 7, 2025, VCAT President Justice Michelle Woodward delivered a decision that many are calling a watershed moment for retirement housing rights:

• Exit Fees Must Be Transparent: Justice Woodward found that exit fees tied to unknown future sale prices violate Section 206S of the Residential Tenancies Act 1997 (Vic) (Act). Since the fees cannot be disclosed at the time of agreement, they are unlawful and unenforceable.

• Charging Rent to the Deceased is Unconscionable: The Tribunal also ruled that requiring grieving families to pay rent while being unable to use the property is “harsh, if not unconscionable.” Under Section 206G of the Act, RSAs must now be varied to allow estates to sub-let the home until it is sold.

Ruling Implications:
The ruling sends a clear message to operators that transparency is paramount. It also enables residents and their advocates the ability to challenge existing practices by some retirement housing providers.

What’s Next?
Operators across Victoria will need to review and likely revise their RSAs to comply with this precedent. For residents, this could mean significant financial relief and greater peace of mind. For the industry, it’s a call to prioritise ethical agreements and clear communication.

As this case gains national attention, it could prompt legislative reform and inspire similar challenges in other states.

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