Buying a House with Solar Panels

07/11/2017
Buying a home with solar panels is becoming increasingly common these days because of greater emphasis on renewable energy, the possibility of reducing your energy bills and the technology becoming cheaper, helped further by government grants.

This article purely examines when you're buying a freehold property with solar panels rather than a leasehold property.

This is because, as a leaseholder, your freeholder owns the roof space so it is purely a matter for them.

If you buy solar panels outright, you can benefit from much lower energy costs, payments from the Government (feed-in tariff – see below) and get an income from selling electricity back to generating companies (export tariff – see below). This would be the case also if you buy a property on which the previous owner has sited solar panels which they bought outright.

However solar panels are still relatively expensive to buy outright (see below) so many people in preference opt to lease out their roof space to solar panel companies to install the panels, normally for 25 years. They may also buy a property where the roof space has been leased out in this way. The incentive for the home owner here is that they get free or subsidised cost electricity and possibly an income (export tariff). The solar panel companies generally keep the feed-in tariff as part of the deal.

The leasing option has some complications to consider, however, regarding mortgage lenders and when it comes to buying or selling the property. Most mortgage lenders' terms dictate that the lender's consent is required when the owner of a mortgaged property wishes to grant any lease involving the dwelling to a third party, which a 25-year lease of the roof space clearly is.

So if you're looking at leasing out your roof space to solar panel companies you should contact your lender about it at the earliest opportunity to avoid being in potential breach of your mortgage terms and conditions.

There are currently around 1.5 million UK houses with solar panels and the number is rapidly growing:
  • London currently generates more solar power than Madrid
  • The UK is currently 4th in the world in terms of photovoltaic systems installed; and
  • The UK is installing solar panels faster than any other European country.

If you're looking to buy a property which has roof space granted as a lease to solar panel providers, you can expect your conveyancing to be treated and charged as a leasehold transaction because of the extra work which always accompanies investigating a leasehold title.

This article looks at the following aspects of the matter:

  • What are solar panels?
  • How much are solar panels and how long do they last for?
  • What are the feed-in and export tariffs?
  • Do you need planning permission for solar panels?
  • Can you get a mortgage on a house with solar panels?
  • What effect do solar panels have on the value of your house?
  • What problems accompany selling a house with solar panels?
  • Are solar panels portable?

If you're thinking about buying a property with solar panels and need conveyancing services, we can help: please call us on 0207 112 5388. Or if you're in a hurry, please click for an online conveyancing quote. Please select 'Leasehold' on the form.
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    1What are solar panels?
Solar panels are 3-dimensional cuboid objects containing material which, when the sun shines its light – or photons – on them, are able to absorb the energy given off and which contain circuitry which can generate heat or electricity from the sunlight.

There are 2 types of solar panel:

  • Photovoltaic Solar, known as solar PV, which catch the sun's energy and convert it into electricity that can be used to power household goods and lighting; and
  • Solar Thermal, which allow you to heat water and cut down heating bills.

The solar PV type is the one which can earn you money through the feed-in tariff as well as reduce your electricity bills.

Regarding solar PV, each panel, or photovoltaic module, typically contains 6 x 10 photovoltaic solar cells which capture the sunlight. The other components each panel include an inverter, a battery pack for storage, interconnection wiring and possibly a solar tracking system. Any property which has been set up to capture and harness solar power will have a number of these panels.

Solar thermal systems involve solar collectors, pipes and a hot water tank and are simpler in design.

Most commonly, solar panels are used for solar water heating systems and it's increasingly the case that solar power, once the panels are in place, is far cheaper than buying the equivalent amount of power from a fossil fuel source.


    2How much are solar panels and how long do they last for?

Prices quoted were accurate at press time but note that this is a rapidly changing market.


To buy a solar PV system for a house outright, you can typically expect to pay a minimum of £5,000 for a basic system but if you want a larger potential electricity output, using solar tiles rather than panels, you can expect to pay upwards of £10,000.

For a solar thermal system, you can expect to pay between £3,000 and £6,000).

For siting solar panels, you'll benefit best from having a predominantly south-facing roof and the further south in the UK you live, generally the more you'll benefit from increased hours of daylight. You should ensure that your roof is unshaded between 10am and 4pm.

How long do solar panels last for?

Solar panels normally carry a 25 – 30 year warranty and some older versions are known to have lasted for more than 40 years.

Solar panels are generally regarded as low maintenance although you'll probably need to replace a part called the inverter within about 25 years (cost around £800) and things can obviously go wrong. You should check that your installer warranty covers you properly against this happening and you must inform your insurer – your monthly premiums may increase.


    3What are the feed-in and the export tariffs?

Feed-in tariff

This is a payment from the Government (but paid via an energy supplier) to pay households in England, Scotland and Wales for all the electricity they generate – whether you use it or not. The rate is 4.07p/kWh.

The feed-in tariff is income tax-free and paid quarterly by energy suppliers. It's guaranteed for 20 years, and is index-linked so rises with inflation. The Energy Saving Trust estimates panels registered at a typical home can typically earn £150/year under the feed-in tariff.

Export tariff

This is a payment for energy you don't use which is sent back to the grid (unless you have an export meter, it's normally assumed there's a 50:50 split). It's set at 5.03p/kWh.

You need A 'D' rating on your Energy Performance Certificate (EPC) (click to read more about this) to get the full feed-in payment (4.07p/kWh in July 2017). If you're below D, this falls to 0.43p/kWH, making the incentive considerably less attractive. You'll need an EPC if you're selling any property or are a landlord; these are valid for 10 years.

    4Do you need planning permission for solar panels?
You don't generally need planning permission for installing domestic solar PV or solar thermal systems.

The big exceptions are if your property has a flat roof, is listed, is in a conservation area or if your planned system is going to be particularly large. If any of these are the case, you might need to get planning permission and/or approval from your council's building control team, so check with your local authority.

In England and Wales, LINK the Government's Planning Portal regarding solar panels says that panels are likely to be considered as "permitted developments".

    5Can you get a mortgage to buy a home with solar panels?

1 Previous owner has bought the solar panels outright

If you're looking to buy a house on which the previous owner has installed solar panels which they bought outright, assuming that owner produces all the required warranties and guarantees and that you can get insurance which covers the panels, you should be able to apply for a mortgage as normal.

2 Solar panel company owns the panels and has a continuing lease on the roof space

Potential mortgage lenders are likely to apply increased scrutiny when an applicant wishes to buy a home with solar panels for which a solar panel company has leased the roof space.

The lender will need to be satisfied with the lease agreement because the terms of the lease will continue to apply to a new buyer and will affect any new lender who subsequently grants a mortgage on the property.

The lender will wish to know, for example, who is responsible for removing the solar panels if the roof needs repairing.

In practice, with the number of homes with solar panels increasing rapidly, mortgage lenders will generally allow you to get a mortgage for such a home, subject to certain minimum requirements. You can click here to view the Council of Mortgage Lenders' guidance on Solar Panels

It has become common practice for solar panel companies to give new owners the option to buy the panels outright or to carry on with the arrangement under the terms of the original lease. If you're given this option, whichever path you choose, you have to inform your mortgage lender.


    6What effect do solar panels have on the value of your house?
Our research suggests that having solar panels installed has no clear effect on the likely value of your property when you come to sell up, although some buyers may view them as an attractive add-on. On the other hand, some buyers might be put off by how the panels make the house look.


    7What problems accompany selling a house with solar panels?
If you own your solar panels outright, there should be no additional issues. If you're leasing your panels, you'll most likely have the option to buy out the lease (thus taking ownership of the panels) or to pass on the lease for the new owner to take up.

It's worth considering that there may be an expensive early repayment charge involved if you leave the lease agreement early, such as with mortgages. Additionally, if you choose to let the lease be passed onto the new owner, that new owner will still have to be 'vetted' by the solar panel company.

    8Are solar panels portable?
No, is the short answer. This is mainly because they are built bespoke to your house, is likely to make them unsuitable by definition to a different property. There are also issues such as because the panels have been moved, they would then be classed as an 'old' system, which would adversely affect the potential tariff payments. Besides, clearly there would be considerable costs involved, particularly labour.

The best analogy here is wouldn't consider ripping out your boiler when you move!

If you've any questions about buying or selling a property with solar panels, please give our team of experts a call on 0207 112 5388.


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