28 Nov Pros and Cons of Selling Houses With Leased Solar Panels
The rise of solar energy in domestic UK households has exploded in recent years. Domestic solar panels are an excellent source of renewable energy that help homeowners The rise of solar energy in domestic UK households has exploded in recent years. Domestic solar panels are an excellent source of renewable energy that help homeowners save money on their bills, reduce their carbon footprint and ultimately provide an efficient source compared to grid energy.
However, while these eco-friendly home improvements can undoubtedly enhance a home’s appeal, selling properties with leased solar panels presents a handful of challenges and opportunities for sellers. The minor pitfalls of solar panel installations are not often talked about, and understanding these considerations is vital for homeowners looking to attract a fast buyer in a competitive property market like today’s.
Understanding Solar Panel Arrangements
Before putting your property for sale on the market, it’s essential to understand the intricacies surrounding solar panels and how they are tied to your property.
Recent statistics suggest that as of early 2024, nearly 1.5 million homes in the UK now have solar panels installed, equating to roughly 4.6% of the entire property market. However, not all homeowners in this category will actually own their solar panels outright.
If you own the solar panels outright – and have paid in full for their installation – you will own the roof they sit on. However, the alternative is that you may have ‘leased’ your roof to a solar energy company, which, in turn, means your solar panels are not owned directly by you. While you benefit from the generated green energy, the third-party energy company owns and maintains the panels and the roof.
During the house-selling process, many prospective home buyers will want to validate whether they will inherit ownership of the solar panels as well as the property itself. They will likely request a RICS Level 3 Building Survey Report to assess the property’s structural integrity, including how the solar installation affects the roof structure and overall building condition. Alongside this, they may ponder any changes to the ownership agreement and whether any remaining liabilities are due.
As such, house sellers need to consider the advantages and disadvantages of such a solar panel arrangement.
Advantages of Selling a Home with Solar Panels
1. Energy Efficiency
Many modern buyers are increasingly environmentally conscious, and are therefore more likely to appreciate properties that have been retrofitted with solar panels, together with other energy-saving and eco-friendly solutions. Well-maintained solar panel systems can help your property stand out in a crowded and exceptionally competitive market.
2. Cost Savings
Properties with solar panels are often more sought-after due to their proven reduced energy costs for homeowners. When selling your property, you may find that you can showcase tangible electricity savings from your time spent in the property, providing evidence of the system’s financial and eco-friendly benefits.
3. Improved EPC Rating
Solar panels usually boost a property’s Energy Performance Certificate (EPC) rating, which can make it more attractive to buyers who value eco-friendliness. EPC ratings can exponentially increase a property’s market value (sometimes as high as 14% with the right upgrades), which can help its listing stand out to the right types of buyers.
Challenges to Consider
1. Lease Transfer Complexities
If you have leased your solar panels, the transfer process must be carefully handled. New buyers will need to ensure they meet the particular leasing company’s credit requirements, accept the existing lease terms and understand their ongoing commitments and obligations. These must be communicated before any paperwork is signed.
2. Mortgage Considerations
Some mortgage lenders have stringent criteria for properties with leased solar panel installations, thus potentially limiting the pool of available buyers. However, those seeking a cash offer for an instant property sale may find this less problematic.
3. Maintenance and Warranty Issues
As far as ongoing solar panel maintenance, repairs and servicing are concerned, prospective buyers will need clarity on any:
- Remaining warranty periods
- Annual maintenance responsibilities
- Performance guarantees
- Cost implications of the lease agreement (if one is present)
Essential Solar Panel Documents
Sellers should maintain and consolidate all relevant paperwork pertaining to their solar panel purchase or lease, including the original agreement(s), maintenance records, warranty information, performance data, EPC ratings and any recent notable savings. This will all help provide reassurance and evidence for buyers.
Most home and building insurance policies will typically include solar panels as standard under their coverage. Providing evidence of this will no doubt be useful for prospective buyers, but it’s always wise to check ahead of time. Ideally, homeowners will want to confirm eligibility for coverage before fitting solar panels into their homes.
Also, once your solar panels have been fitted, you will need to register them with a licensed energy supplier that can then provide an MCS certificate. Hard evidence that this registration is valid will also help prospective buyers make a more informed decision.
How to Ensure a Smooth Solar Panel-Fitted House Sale
Home sellers should consider having an impartial, third-party solar system assessment and evaluation before listing the property. This process can help them identify any urgent and pressing maintenance requirements, verify their current system’s performance, and provide recent documentation for new buyers to consider.
It’s always prudent to be upfront about the solar panel arrangement in your property listing. Such transparency helps attract serious buyers in a challenging UK property market and avoids wasting valuable property viewing time with those unwilling to take on a solar panel lease agreement.
With fully paid for solar systems, warranties and any Smart Export Guarantee (SEG) payments, established from owning the solar panels, can usually be smoothly transferred to a new owner. However, leased solar panels raise more potential issues for buyers. The original contract and remaining length of the lease may carry non-negotiable terms and conditions, which in turn can affect the success of any mortgage application for the property.
Agreeing a Deed of Variation may offer opportunity to negotiate fresh terms, and sellers should work with their solicitors to prepare this document well in advance of the sale to prevent any delays in the conveyancing process.
Alternative Routes to Sale
If you need help selling through traditional routes, consider working with investment property buyers who understand the complexities of any lease agreements tied to the property and ownership. They can offer proactive and tailored advice on decisions when it comes to selling properties with outstanding liabilities.
When selling a property with leased solar panels, timing is everything. Some sellers find that working with specialist home buyers can simplify the process, particularly when facing time constraints or complex lease situations. Professional property buyers like Home House Buyers can offer upfront capital to sell your property and create a clear path towards a seamless and stress-free exchange and completion.
Homeowners should not feel overwhelmed or daunted by selling with an incumbent solar panel lease agreement. Whilst it can be complex, it’s far from impossible, and with the right advice and support in tow, it will be a much easier process.