The ABC yesterday launched its second salvo on the $12 billion over-50s land lease communities sector with a headline: "From gated villages across Australia, retirees are sharing their financial horror stories about the land lease industry." 

Only one owner/operator was named: Lifestyle Communities. It was also the subject of its first attack last week on ABC TV's 7.30 Report: "Financial Prison". It has lost 25% of its share value – shares owned ultimately by Mums and Dads. 

Most village operators will recall the damage caused by Adele Ferguson’s joint investigation in 2017 between The Sydney Morning Herald, The Age and the ABC’s Four Corners, which claimed Aveo was engaging in practices that included churning residents, fee gouging, and misleading marketing promises.  

That campaign – and it was a media campaign – titled ‘Bleed them dry until they die’ demolished most village sector sales by up to 30% which dragged out for three years.   

By our back of envelope estimation that cost to the village sector was $2B+, driven by Aveo’s value collapse, the stalling of the sale of Lendlease and Stockland villages to institutional investors, plus killing individual village home sales – impacting village residents and their family inheritances. 

We did not agree then with the reporting by Adele Ferguson and we do not agree with her reporting now. It is a big article – 3,300 words (that is 11 minutes of reading) – with interviews with residents in Victoria, Queensland and WA.  

But the common factor is that the complaints all relate to people who are complaining about the injustices they see because they no longer like the contract terms they agreed to and signed. 

"A recurring theme in our conversations with home owners when they come to us with concerns is their feelings of being trapped and unable to do anything about the injustices of the situation they face," he said. 

The repeated injustice in the story is that there are fees that they (the residents) no longer like. When they battle those fees, the story repeatedly refers to operator abuse of the residents, inferring the operators don’t budge on the fees. 

Repeating the 2017 experience, there is a call by aggrieved parties and onlookers for more regulation – something the land lease sector has been choosing to casually deflect in our discussions with the leading executives over the past five years.  

So here is the question: will the LLC sector hope this will subside and go away, like the retirement village sector did in 2017, or will it be proactive and form a proper peak body and implement robust processes, creating a positioning of a strong, responsible ‘social license’. 

The New Zealand Retirement Village Association is a perfect model to mimic in that it is largely private operators, with about six major players and 350 villages – roughly what the LLC sector is here. They proactively invest in their social license, which their Executive Director John Collyns defines as: 

“Social licence” can be broadly described as the ability of an organisation (or industry) to carry on its business because of the confidence society has that it will behave in a legitimate, accountable and socially and environmentally acceptable way. 

Complacency, plus executives that have entered our sectors since the 2017 media event and buoyant markets lead to pushing such things to the back of the cupboard, but the future cost will be great – just look at the RV sector and its buyback and asset registry costs that have been regulated, to name a few. 

And that complacency persists. This Adele Ferguson LLC article repeatedly refers to the managers of communities, as bullies, as unprofessional and liars.  

It was as a result of the 2017 ABC program, which highlighted similar village manager claims, that we created the DCM Institute to introduce professional development for the first time. We now have 600 village managers out of a potential 1500 nationally on the program. (We are in Brisbane with a full professional development event today). 

Why aren’t all 1,500 on the program? Why is it that in NSW, which requires every village manager to receive professional training thanks to the Rules of Conduct, a new regulation that came out of the 2017 media storm, just 200 of the state’s 500 villages are doing any training. 

The operators are ignoring this regulation that carries penalties. Now the Department is conducting an average of three audits a month, catching them out. Will this lead to more regulations? 

Why is it that the Code of Conduct, created by the Retirement Living Council after 2017 (which also requires manager training), has not been signed up to by about 60% of villages nationally? 

Complacency in good times, is this the answer? . 

James Kelly, the Co-Founder and Managing Director of Lifestyle Communities, has dedicated 21 years to building homes for over 5,000 residents. He can have the final word on the impact this sector's complacency can have, in his email to us yesterday: 

Footnote: the NZ Retirement Village Association saw the DCM Institute for professional development of village management and approached us to joint venture it in NZ – which is now the Te Ara Institute, with 300 members even though NZ is one fifth the size of Australia. 

Check out the DCM Institute today. Click HERE.