Land lease community developer Lifestyle Communities (ASX: LIC) reported a small number of customers cancelled down payments on homes following a scathing ABC report in July, leading managing director and co-founder James Kelly to make personal calls in a poignant campaign to turn the tide.
The company reported after the market closed yesterday that operating profit fell 26% to $52.9 million, and management held a web conference this morning to discuss the results and address concerns following the revelations.
Kelly explained that most of the customers who cancelled their deposits are already facing long lead times into FY26, while the “vast majority” are continuing their journey to relocate to one of the lifestyle communities.
“After speaking with everyone, we felt reasonably confident about bringing them back and the decision was made quickly,” he said.
“We expect most of the money to be refunded over time. We have not seen a sustained rate of cancellations for that reason after the first week. We have had one case of a down payment on a home that was already confirmed being cancelled.”
“I actually picked up the phone and spoke to some people directly. I was able to save two people.”
The company completed payment on 27 new build homes between 1 July and 12 August and has down payments on 348 new build homes, of which 228 are ready to be completed and paid for this financial year, with 120 homes remaining for FY26.
Kelly added that he plans to visit communities and meet with homeowners in September and October, a practice that was originally set to occur every six months, but said that in light of recent events, now is a good time to reassure residents.
ABC's 7.30pm current affairs programme criticised Lifestyle's plan to increase the rate at which tenants are charged exit fees by 4% each year, up to a cap of 20%, and also featured investor meeting documents in which the company claimed it was targeting “lonely women, domestic women, active women”.
As for the report itself, Lifestyle issued a statement expressing regret over that particular wording. However, the company remains firm in its position on exit fees, also known as deferred management fees (DMF).
Residents of the lifestyle community of Wollert in Melbourne's north featured in the programme said they felt like “prisoners” under the policies.
“Wallert had eight sales in June, and seven of them were through referrals. That's the irony,” Kelly said.
“Interestingly, we have had a few sales this month on Wolaert, and you would think that with all the attention Wolaert would not see sales.
“There are people out there who really believe in this model, so they're going out and helping us market it.”
Following the media reports, the company is fast-tracking its proceedings at the Victorian Civil and Administrative Tribunal (VCAT), where many of the complaints highlighted in the article have been formally lodged with the regulator.
Lifestyle has yet to receive any instructions as to when or what format a hearing will take place, as VCAT has a long waiting list of complaints from other residential areas. Meanwhile, Mr Kelly says residents in the company's area have written “numerous” letters of complaint about ABC coverage to the Minister for Communications.
The co-founder claimed the homeowners were “really upset” by the reports, claiming they were being portrayed as “stupid” and not knowing what they were doing.
He said there had been backlash over the show's alleged portrayal of “everyone over 65 as old, infirm and stupid” — without any mention of anything relevant to the intelligence of its customers.
“We've explained very clearly why it works and why we can keep admission prices so low,” Kelly said at the meeting.
“Having the option to pay 20 percent up front or 20 percent when you move out is a pretty good idea. You can either pay more and enjoy less, or enjoy more and pay later.”
“We know which way most people are going to go, but it defeats the whole point of the story that was reported on ABC, that people are somehow financially trapped because they had to pay DMF. They forgot that they were actually paying a very low price to begin with.”
“The purpose of this review is to look at, from an independent perspective, what is the best way to tackle this issue.”
LIC shares are down 5.87% today at $8.50 at the time of writing.
