Tim Allerton is no pushover. From his office on Kent Street in Sydney’s CBD, the experienced public relations professional is often called in when companies and big names are in crisis, including Seven West Media during its public relations disaster with former staffer Amber Harrison.

But he came up for an unwinnable battle when sorting out the sale of his aunt Joan’s retirement village unit.

He was pitted against retirement village giant Aveo – and in the end, he and his family had to surrender more than $150,000 in exit fees, capital losses and other fees.

Tim Allerton. Photo: Janie Barrett

Allerton is one of the many Australians who are left to pick up the financial pieces for relatives who have purchased a retirement village unit.

A Fairfax Media-Four Corners investigation has uncovered harrowing stories of financial loss experienced by some of our most vulnerable citizens who have bought into the retirement village sector. And many of these people are residents at villages operated by listed retirement village giant, Aveo.

Allerton’s aunt, Joan Buswell, bought a unit in Aveo’s Lindfield Gardens village in Sydney’s lush upper north shore in 2008 for $250,000. A single woman with a long career as a teacher, she moved into the retirement village after she could no longer look after herself. It was only when she died, at the age of 86, that Allerton learned of the financial mire his aunt had landed herself in.

Joan Buswell.

“The original lease contract was 172 pages, and it contained very dense definitions, charges and so forth, and perhaps at our fault, we didn’t investigate it as heavy as we should have, but we were looking for accommodation for her at the time, and that was our main priority,” he says.

Fairfax Media-Four Corners spoke to numerous current and former residents, their children, lawyers, former Aveo staff and lobby groups, and found some questionable business practices including churning, gouging, safety issues and misleading marketing and advertising. It uncovered a legislative framework that leaves the responsibility for regulating the sector to the overworked, underfunded consumer affairs bodies, NSW Fair Trading and Consumer Affairs Victoria, which don’t appear to have enough powers to help the people it is supposed to represent.

The media investigation found that “churn” is a key part of the business model with Aveo targeting and achieving a “turnover” of as much as 12 per cent per year, or 1200 residents.

That tactic is leading to calls by residents and consumer lobby groups for the competition and consumer watchdog, the ACCC, to intervene.

Aveo declined to be interviewed for the story.

In a statement, the company said it was “committed to enhancing the lives of older Australians by improving living choices”. It said that Aveo rates very highly on resident satisfaction surveys.

In answers to a series of questions, Aveo denied it was more aggressive than other operators, saying its exit terms were more favourable and substantial than those available “from almost any other operator”.

It says it does not generate a profit from ongoing service fees and it does not have a policy to churn residents.

Like resident Geoff Richards, who Fairfax and Four Corners revealed had to leave an Aveo retirement village when his partner Harry Nash died, Allerton says Buswell was “encouraged” to move out and sell her unit when she became ill.

“Let’s put it this way, I got the impression they didn’t encourage her to stay and, effectively, they were quite happy for her to leave,” he says.

Allerton says the family considered appointing an external real estate agent to sell the unit but found it too difficult. “We certainly weren’t encouraged to get an outside agent,” he says. “We were told that we wouldn’t get the promotional support from the village and it was preferable to use Aveo’s own agents on site.”

Aveo Lindfield Gardens near Sydney. Photo: Aveo

When Buswell died in early 2013 it became even more urgent to sell the unit and wrap up the estate, particularly given the family were being charged monthly maintenance fees. “The maintenance fees, despite the fact she’d passed away at that time, were around $10,000 to $13,000 for each year, so it was just eating a hole in our pockets … and we were concerned there was a really strong prospect that we would end up with nothing if the apartment remained on the market for too long.”

Finally, the family dropped the sale price to $199,000 but still it didn’t sell.

After two years, a family member decided to do some secret shopping. “There was a musty smell that I had not noticed in any of the other units,” she says.

Allerton’s theory is that the unit wasn’t being shopped around. “I think just the smell of the apartment, the fact that it had been dormant for so many months, tended to make us a little bit jaded in our thoughts about their activity,” he says. “My theory was that they’d built a whole range of apartments on site and clearly the priority was to sell those first, and certainly when my family members went to do a mystery shopping exercise at the village, they were shown those first, and not shown my auntie’s at all,” he says.

When the unit finally sold, two-and-a-half years later, at a 20 per cent discount to the purchase price, the family ended up with $94,000 from the original $250,000 investment.

“I think one of the most galling aspects of the exercise was the fact that my auntie had passed away, the apartment remained in our hands and yet the monthly bills kept coming in …

“The price was diminishing, to the point where we were actually thinking that we’d have to pay them money to escape.”

Property research house CoreLogic estimates that over the period of the purchase and sale of the unit, similar apartments in Lindfield rose in value by 38 per cent.

Aveo says units may not sell “for a period of time” due to condition of the unit, price expectations and market conditions.

It says it charges ongoing fees after departure like any other strata complex where the property is vacant.

It says its new Aveo Way contract “provides that, upon departure, residents do not have to pay any reinstatement or refurbishment cost for their unit, they pay no selling costs or sales commission, and are entitled to a buyback of their unit in either 12 months or six months (depending upon the state) and a refund of their exit entitlement.”

It says the lack of price growth reflected the market for serviced apartments in the area.

Allerton says the whole experience left a lot to be desired. “The whole thing from go to whoa, was opaque in terms of the charges, the contracts, the complexity of the arrangements, the fees, the ongoing fees after my aunt Joan passed away. It created a very complex picture on what should have been a pretty simple exercise,” he says.

Aveo stands accused of questionable dealings in its push to transform villages with freehold titles owned by the residents into leasehold properties where residents have less of a say over the destiny of the village.