Bank refuses mortgage for tree changers because of wind farm caveat

When Nicole Fagan and her husband found the perfect tree-change home in Kununurra in January, they had no idea that the wind farm that will take in their rural NSW property was going to be a problem for their bank.

“We needed to access a small amount of equity in our home (a mere 12 per cent) for a home in the Kimberley,” Nicole Fagan tells RenewEconomy.

“Suncorp Bank, where I have done all of my banking for years, decided that using 12 per cent of equity in a $1.6m bank valued new house with 360 degree views was an “onerous risk”. The reason given? We had entered into a caveat with a wind farm.”

That is, becuase the wind farm owner Iberdrola had a caveat over the NSW property, Suncorp has revealed it will not lend against it at all.

Suncorp told Fagan it was “unable to take security for a loan where the property has an existing Caveat.”

Not a blanket policy

A Suncorp spokesperson told RenewEconomy that, as a signatory to the UN Principles for Responsible Banking, it was “committed to working responsibly with our clients and customers to encourage sustainable practices and enable economic activities that create shared prosperity for current and future generations.”

“Suncorp Bank supports customers who proactively seek to reduce their carbon footprint and source renewable energy,” the spokesperson said.

“While unable to comment on individual cases, Suncorp Bank does not place restrictions on customers who wish to explore alternative sources of renewable energy and assess every potential transaction on its merits.”

The bank does not have a blanket policy against wind farm caveats.

The Fagans’ 110 acre property near Orange in NSW will host electrical cables to connect Iberdrola’s Flyers Creek wind farm. The couple bought the farm with the caveat already over the title and don’t already hold a mortgage over the property.

Wind farm developers sometimes lodge caveats over land they’re working on to prevent the use or development of land in certain areas, such as within a certain radius of a turbine, without the wind farm owner’s consent, wrote Hopgood Ganim lawyer Karen Browne in a post for the law firm early last year.

The purpose of the caveat is to let future buyers know there is another party that has an interest in the land, and to ensure the wind farm developer is told in the event of any legal changes over the land.

Fagan says her contact in the Iberdrola legal team said banks normally see wind farm caveats as assets, because the property is deriving income from the energy generation activity, and to date none of its other landowners have experienced problems with other banks due to caveats.

A renewable energy industry source told RenewEconomy that for land that already has a mortgage over it, the wind farm developer will seek the bank’s consent before negotiating for the lease and lodging any caveats.

If a developer is seeking external debt funding for a project, financiers will also often require that caveats are registered over project land.