Housing for the Aged Action Group welcomes a decision from VCAT President Justice Woodward which found that the Residential Tenancies Act prevented a land lease village from charging Deferred Management Fees (DMFs). DMFs are a common kind of exit fee charged across several types of retirement housing, often costing departing residents or their families tens of thousands of dollars or more.

“We have long said that these DMFs are unfair and, in some cases, unlawful,” said Shane McGrath, HAAG’s Senior Tenancy and Retirement Worker. “This decision confirms that some of the most common models for DMFs in land lease communities are prohibited under Victorian law.”

Land lease communities, also called residential parks or Part 4A parks, are a form of retirement housing where residents purchase demountable dwellings but lease the land on which they sit. DMFs, adapted from the common business model in retirement villages, are an exit fee often charged on the sale price of the dwelling.

The Residential Tenancies Act provides that no fee or charge can be imposed under a site agreement unless the amount is disclosed. An amount based on the sale price of a Part 4A dwelling cannot be properly disclosed, and so cannot be charged.

“These fees aren’t just technically unlawful, they’re deeply unfair and can have a huge impact on older Victorians. They can limit people’s access to aged care, reduce the amount they can leave to their families, and trap people in badly mismanaged and substandard accommodation,” said Mr McGrath.