Buying A House With Solar Panels

There’s no doubt that the popularity of solar panel installations on British roofs can be seen in just about every street – but should you be careful when buying a house with solar panels?

Having a solar panel installation on your home will provide a sustainable source of energy and see lower energy costs, though not every home hunter will want them – and there are legal implications when buying homes with a solar array.

These solar panels are usually fixed on a pitched roof that is facing south. However, because the panels are fixed to the roof, doesn’t necessarily mean that the panels belong to the property owner.

Also, having solar panels will have an impact on your conveyancing process and there are some important issues that you need to consider when buying a house with solar panels.

Having bought a home with solar panels ourselves, we will tell you all you need to know about buying a house with solar panels.

Is the property leasehold or freehold?

The first question to ask is whether the property with solar panels is leasehold or freehold.

Solar panels can only be installed on a leasehold property with the permission of the freeholder. This means, if you are looking at buying a freehold, you have to make sure to check the following:

• Has the freeholder given permission for the installation?
• Are the leasehold terms such that an installation will be permitted?

If the answer to both of these questions is yes, then it’s unlikely that there will be any issues. However, if the answer to one or both is no, your conveyancing solicitor will explain what the potential ramifications will be.

If you are thinking of buying a freehold property, then there’s no issue because the homeowner will own the roof and no permission is necessary for them to install a solar array.

We have recently bought our new home, which had solar panels already installed. Because it was a freehold, it didn’t cause any issues. Although our solicitor did have to do some extra checks, these didn’t delay the process.

Are the solar panels owned outright?

Buying a house with solar panels might have some clouded issues, so you need to ask:

• Does the homeowner own the solar panels?
• Does another company own the solar panels?

When solar panels first started to be installed on homes, they were quite expensive. As a result, the then government introduced the feed-in-tarrif (FiT) in 2010. It basically meant that the government paid homeowners a fee for the installation and also for any electricity generated.

The help was part of an energy efficiency drive to encourage people to install this renewable energy source. While this did help to bring the cost of installation down, it was still rather expensive.

Along came ‘rent a roof’ schemes. These basically meant that a company would install solar panels for free on a home. While the homeowner would get free energy, the company would get the fee and the FiT, providing them with an income.

What is important here for any potential buyer is that the solar panels will remain the property of the company who installed them. They essentially just rented the roof to put them on.

One thing to be aware of: there will be a lease contract in place for the renting of the roof. Most solar panel company’s leases will usually be for 25 years with the homeowner.

It’s vital you are aware of this, because you might end up losing your solar panels after several years or need to renegotiate with the company, which might end up costing you money.

You can buy a property with a solar panel leasing agreement in place, but you will need:

• To be vetted by the solar panel company
• Check whether your mortgage provider will lend against the property without asking for extra information

Some of these lease contracts even state that the home cannot be sold without the permission of the solar panel company.

Indeed, it is probably worthwhile highlighting with your mortgage provider as soon as possible the prospect of gaining a mortgage on a property that has solar panels already installed and seeking their consent.

The mortgage provider will undoubtedly ask for more information, and you need to be clear about exactly what they will want.

Issues they will need clarification on include:

• Who is responsible for the maintenance costs – the company or the new owner?
• Does the rent a roof company have access rights to the property?
• Does the paperwork comply with the Microgeneration Certification Scheme (MCS)?

There’s also an issue with extra conveyancing work required because you will need the leasehold interest to be noted on the title.

This means that the conveyancing process is likely to take longer – and will cost you more as a result.

For those properties that are being sold with the solar panels being owned outright, then the process for buying is straightforward.

In these circumstances, it’s likely that the mortgage application and the house buying process will proceed along similar lines to those homes being sold without solar panels.

However, in our experience, there will still be certain things that you will want to make sure of before buying the house.

Solar panels must meet the recommended standards

When buying a house with solar panels you want to make sure that the installation has been done according to recommended standards and regulations.

For example, did the installation need planning permission and if so, was it granted? Most solar panel installations fall under permitted development, but there are exceptions.

Has the installation an MCS certification? This is a certificate that shows that the installation has been done by an MCS-approved company and carried out to the highest standard.

While these are extra checks, in our experience, they won’t delay the conveyancing process, as long as you have an experienced solicitor.

If you are buying with a mortgage, you have to satisfy your lender by providing all relevant information. The above-mentioned will be part of it.

There are also solar panel guidelines for mortgage providers, installation firms and customers that have been created by the Building Societies’ Association (BSA), and the Council of Mortgage Lenders (CML).

It is these guidelines that lay down the minimum criteria that all solar panel installations must meet – and also the terms that are required under a lease agreement.

Provided that the lease terms and the installation meet these guidelines, you will find that most mortgage lenders will not have issues with lending.

However, should you find that the installation or the terms do not meet the guidelines, then a mortgage lender will probably insist that the lease for the solar panels is ‘varied’.

Again, this will extend the conveyancing process and push up your conveyancing bill.

When buying a property with a solar panel installation you need to understand that the final decision about whether a mortgage will be agreed upon will lie with your mortgage provider.

Having said that, you may find that other mortgage lenders may have different lending policies.

So, you will need to speak with your mortgage provider as soon as possible and understand what their policies are and supply all relevant information when requested.

Do the solar panels have a warranty?

Among the first things you must do when buying a house with solar panels installed, is to establish whether your solar panels have a warranty.

Most solar panel installations will come with a warranty, and you need to confirm that it is still current and, if so, how much of the warranty remains.

You will also need to check:

• What does the warranty cover exactly?
• Will anything need replacing during the solar panels’ lifetime?

The important issues to consider here is that while most solar panels come with a warranty of between 25 and 30 years, you may find yourself paying for repairs if the warranty does not cover a specific issue.

Can I get a mortgage on a property with solar panels?

The simple answer is yes. But as stated earlier, you’ll need to raise the issue of having solar panels installed on a roof with your conveyancing solicitor.

If the solar panels are owned outright by the seller and the installation has been done to the recommended standards, then getting a mortgage for the house shouldn’t be a problem.

But as we have already explained, if the solar panels are owned by a third party, this could cause issues, depending on the lease contract. Your solicitor will be able to advise you on this matter.

Will solar panels generate an income?

The short answer is no. If the solar panels benefit from the feed-in-tarrif (FiT), then you will be able to make some money from them. However, it won’t be enough to count as an income.

Solar panels that don’t benefit from the FiT, can still generate some money by selling unused energy back to the grid. However, you will have to be with an energy company that offers an export tarrif.

But don’t get too excited, as it won’t be very much. We can sell the electricity we generated from our solar panels back to the grid. However, we get quite a bit less for it than the energy we buy.

You shouldn’t see solar panels as a way to make money, because it won’t work. But they are a great way to reduce your energy bills, whether you own the solar panels outright or only lease them.

Plus you are boosting your home’s energy efficiency – and this also counts towards its Energy Performance Certificate (EPC) rating.

Is it bad to buy a house with solar panels?

For anyone asking, ‘Is it bad to buy a house with solar panels?’, the answer is, ‘It depends’.

As highlighted in this Property Road article, you need to determine:

• Is the property leasehold or freehold?
• Does the homeowner own the panels or are they leased?
• Does the paperwork for the lease exist?
• Are you prepared to pay extra for the conveyancing required?
• Will your mortgage lender agree to a mortgage on a home with solar panels?
• Is the solar panel installation still earning an income – and what is it?
• Will you be facing expensive maintenance or inverter replacement costs?

All of these questions need to be asked and answered before you proceed with buying a house with solar panels to ensure you enjoy your new home.