Lifestyle Communities Limited has suffered a legal setback with the Court of Appeal upholding a Victorian Civil and Administrative Tribunal decision that requires the company to reimburse deferred management fees previously collected from residents. The ruling, handed down on 21 August 2026, confirms that DMF calculations should be based on the purchase price rather than the resale price of properties within LIC’s aged care communities, a distinction that carries significant financial implications for the company.
The positive aspect for investors is that LIC anticipated this outcome. The company has already recognised a provision in its financial statements for the repayment of DMFs collected under the previous methodology from affected homeowners dating back to the original VCAT ruling on 7 July 2025. This suggests management held realistic expectations about the appeal prospects and moved to protect the balance sheet accordingly, reducing the likelihood of a material adverse surprise in upcoming results.
What matters more for forward investor returns is LIC’s business model evolution since the VCAT ruling. The company has revised its DMF calculation method to align with the court’s decision. The fee is now calculated as a percentage of the purchase price, pro-rated over a five-year period with a maximum cap of 20 percent. This represents a structural change to how the company generates fees from its communities and moves away from the resale-based model that historically generated higher fees when properties appreciated.
The revised approach also positions LIC favorably within the regulatory environment. The new DMF methodology aligns with the proposed Consumer Legislation Amendment Bill 2026, suggesting the company is now operating ahead of any legislative changes that could have forced further modifications. This alignment reduces the risk of future regulatory disruptions to the business model, though investors should monitor the bill’s progress through parliament to confirm its final shape.
LIC has flagged that it will digest the court’s detailed reasoning and provide further updates as required. Investors should watch for the company’s next market announcement outlining the financial impact of the provision, the timeline for refunding affected residents across its 5,800 resident base, and any further commentary on the implementation of the revised DMF methodology. The announcement is price sensitive and classified as material by the ASX.
View the full ASX announcement (PDF)
About Lifestyle Communities Limited (ASX: LIC)
Lifestyle Communities is an Australian real estate company that develops and manages land lease communities for residents over 50 years in Victoria. The company generates revenue through selling manufactured homes and collecting land rent from approximately 3,000 settled homes across more than 30 communities in coastal and outer metropolitan regions. It operates one of Australia’s largest portfolios of over-50s housing with additional homes in development or planning.
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