Many homes now have solar panels and with energy bills a concern, they are more attractive than ever. But before you commit to buying a home with solar panels already installed, there are certain points you need to be aware of.
Solar panels provide free or cheap electricity for your home and reduce the need to consume energy generated by using fossil fuels, which benefits the environment. Some solar panels generate enough energy to sell to energy companies, providing a small income for the homeowner.
Solar panels owned by the homeowner
If the seller owns the solar panels outright, the situation is fairly simple, although you need to make your mortgage company aware that there are solar panels at the property. They will generally ask to see evidence that the company that installed the panels is accredited and that the local authority has approved the placing of solar panels at the property.
Your solicitor should also check that the panels can be removed without a penalty being incurred if they are feeding into the power grid.
You should factor in maintenance costs and bear in mind that solar panels may need replacing after around 20-25 years. The solar panels should be insured.
Leased solar panels
Many solar panels were installed after 2010 for free by solar power companies looking to benefit from the government’s generous Feed-in Tariff scheme. The homeowner granted the company a lease of their roof, usually for 25 years, and the company added solar panels at no cost.
Schemes like this are no longer in existence and solar panels have become more affordable, but for those who took up the offer of free panels, the lease of their roof still remains.
This can cause a problem when you try to secure a mortgage, as lenders are reluctant to loan money over a property where the roof has been leased to a third party.
Mortgage lenders will need full details of the installation and the lease. Where the solar panel company documentation was not drafted in accordance with official guidelines, you may struggle to find a lender who will accept the situation and agree to lend.
You should be aware that in turn, you might find it difficult to attract a buyer when you want to sell if they are also finding it hard to secure a mortgage.
What to consider if you are thinking of buying a property with leased solar panels
You should ask for a copy of the lease early on before you commit money to a survey. Your solicitor will be able to check the lease and you can also ask your mortgage lender if it is acceptable.
There may be a buy-out clause allowing the property owner to pay back the cost of the installation plus a fee in return for terminating the lease and owning the panels outright. You can ask the seller to arrange to buy out the solar company between exchange and completion if this is a requirement of your mortgage lender.
You should take care if you are thinking of altering the roof in any way, for example by converting the loft. The lease may prohibit this or you may end up with extra costs for working around the panels.
Buying a home where the roof has been leased to a solar power company can be more complex and time-consuming than normal and you should be prepared for the transaction to take longer than usual. Ask your estate agent if the seller can provide all of the relevant information before you make an offer if possible, so that you can avoid wasting time on a transaction that will not ultimately be successful.
Contact us
If you are thinking of buying your first home and you would like to speak to one of our expert property lawyers, ring us on 0333 305 5189 or email us at info@lpropertylawyers.co.uk
