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What to Check When Buying a House With Solar Panels

Adele MacGregor

Written by

7th May 2021 (Last updated on 10th May 2021) 8 minute read

There are many benefits to buying a property with solar panels, not least because you will generate your own energy, saving money on your utility bills. Under a new government scheme, you could even be paid for the electricity you generate but don’t use yourself.

Furthermore, with rising energy prices and the knowledge that electricity use produces emissions that accelerates climate change, people are increasingly keen to switch to renewable energy sources. However, opting for a home with solar panels can add to both the conveyancing and mortgage processes, potentially causing delays and requiring additional paperwork. 

Compare My Move work with property experts to bring you the most up to date information on the house buying process. In this article, we review getting a mortgage for a property with solar panels, the advantages and disadvantages of buying a property with solar panels and the checks you should do before finalising the sale. 

This article will cover the following:
  1. Will You Own the Solar Panels?
  2. Solar Panel Lease Problems
  3. Does the Installation Meet the Recommended Standards?
  4. Getting a Mortgage for a Property with Solar Panels
  5. Is There a Warranty in Place?
  6. Is the Property Freehold or Leasehold?
  7. Which Direction Does the House Face?​
  8. Can You Extend or Have a Loft Conversion?
  9. Does Solar Make Sense in the UK as an Investment?​
  10. Advantages and Disadvantages of Buying a House with Solar Panels
  11. Moving Into a House with Solar Panels
  12. Next Steps of Buying a House

Will You Own the Solar Panels?

Solar panels are most commonly fitted to the roof of the property. However, owning the property they are fitted to does not necessarily mean you own the solar panels themselves. 

The UK government introduced the Feed-in Tariff (FiT) in 2010 where companies offered to fit solar panels for free, known as 'Rent a Roof' schemes. Under these schemes, the homeowner would typically grant a lease (usually 25 years) to a third party or company allowing them access to the roof in return for a free installation. As a typical 4kw panel installation would have cost over £15k at the time, this was a way for many people to utilise solar energy in their home without the large price tag. 

Today the cost can be as low as £6,000 and as a result, the Rent-a-Roof schemes are far less common. Nevertheless, those schemes taken out on homes at the height of the popularity of Rent-a-Roof schemes will still be bound to the terms of the lease and will be legally binding on any subsequent owners of the property.

Solar Panel Lease Problems

Under Rent-a-Roof schemes, you will be bound by a lease which may include maintenance cost obligations, which you will be liable for as the new owner. There may also be certain access rights granted to the lessor (the company that leased the solar panels). In these circumstances, the lender may be unwilling to approve a mortgage.

Further issues can arise if the installation was carried out by a company whose legal paperwork was not drafted in accordance with the Council of Mortgage Lenders (CML)  guidelines or not certified by the Microgeneration Certification Scheme (MCS). 

If possible, you should try to obtain a copy of the solar panel lease for your conveyancing solicitor to review. Doing this in the early stages of the process will save time and disappointment further down the line. Be aware that the additional checks required may cause some delays in the conveyancing process, potentially slowing down the sale of the property. Ensure you have a reliable and trusted surveyor by comparing solicitors in your area. 

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Does the Installation Meet the Recommended Standards?

You will need to be sure the fitted solar panels meet the recommended standards. If they do not, this will likely hinder your mortgage application. The lender could refuse a mortgage completely if the property is deemed a risky investment as a result of the installation.

With this in mind, a property survey will be essential. Solar Panels could potentially be hiding or be the cause of issues with the roof or the home, so a thorough building survey is a vital step in buying the home.

Getting a Mortgage for a Property with Solar Panels

When it comes to applying for a mortgage for a property with solar panels, you will need to be aware of how the solar panels were obtained. If they are owned outright by the previous homeowners and the required warranties and guarantees were obtained, you are unlikely to face issues when approaching a lender for a mortgage providing you are able to get insurance for the panels. 

However, if the solar panels on the home are leased and/or were installed as part of a “Rent-a-Roof” scheme then you may face complications in obtaining a mortgage

Is There a Warranty in Place?

The majority of solar panels will have come with a warranty, so it is important to obtain a copy of this if there is one and find out how much of the warranty remains (most solar panels will have a warranty of 25-30 years). You should also check what the warranty covers and if anything is exempt or likely to cause issues for your mortgage application. 

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Is the Property Freehold or Leasehold?

If the property is freehold, the homeowner owns the roof space and is, therefore, free to install panels or rent the roof to solar panel companies. But, if the property is leasehold, the freeholder’s permission will be required for solar panels to be installed.

If the property with solar panels you are considering buying is a leasehold property, the freeholder will need to be contacted to see if the necessary permission has been obtained, which can complicate the process and cause delays. Furthermore, the terms of the lease will need to be carefully reviewed.

Which Direction Does the House Face?​

It is worth making a note of whether there is a south-facing roof and clear shading from other buildings or trees. A south-facing roof that is unshaded between 10 am and 4 pm will benefit the most from solar energy. This ensures you benefit from maximum energy savings on the electricity you use and profit for what you don’t use.

Can You Extend or Have a Loft Conversion?

Although a loft conversion or extension is not out of the question, it may involve removing the panels before proceeding. According to Green Energy Electrical, the solar panels and solar components should only be moved by qualified engineers. 

Does Solar Make Sense in the UK as an Investment?​

It is a common misconception that solar energy can only be generated on sunny days. As those are often few and far between in the UK, it is understandable that there are reservations about investing in solar energy and solar panels for a UK home. 

However, it is daylight hours, not sunshine, which generates the energy from the sun. Therefore the further south you live in the UK, the more beneficial solar panels will be. 

In January 2020, the UK Government introduced a new scheme - known as the smart export guarantee (SEG) - to pay households that install solar panels. Through the scheme, electricity generated by households with solar panels that they don’t use themselves is pumped back into the national energy grid. Previously the Government offered the Feed-in-Tariff scheme which closed to new applicants from April 1st 2019.

Advantages and Disadvantages of Buying a House with Solar Panels

When considering buying a home fitted with solar panels, it is important to take into account both the advantages and disadvantages of owning a property powered by solar. 

Using “clean”, renewable energy and saving on electricity costs certainly make the prospect enticing. However, you will need to keep in mind that there are pitfalls when buying a property with solar panels, especially if the panels are leased. Below we’ve set out the key advantages and disadvantages:

AdvantagesDisadvantages

Generating electricity for your home - saving you money on utility bills

Potential issues with getting a mortgage on the home

Potential to make money via the UK Government scheme

You may not own the solar panels and be bound by a Rent-a-Roof scheme

Using “clean”, renewable energy 

Solar panels can alter the appearance of a property with some people feeling they look “ugly”.

Low maintenance costs

Maintenance costs

Solar panels could increase the value of the home

Solar energy storage is expensive

Solar panels could potentially lower the price of the home

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Moving Into a House with Solar Panels

Once you have moved into the home, it is important to understand how you can get the most out of the solar panels and ensure they continue operating at maximum efficiency. 

Besides ensuring your home gets the energy it needs, you will also want to be aware of the funds you could be making from the solar energy you aren’t using. The Feed-In Tariff is a Government guaranteed scheme that rewards owners of systems by paying them for the solar power they produce. To receive the Feed-in Tariff, a transfer of ownership form needs to be signed by both you and the previous owner. This will assign the Feed-in-Tariff contract to you. 

Budget for Maintenance Costs

Although the costs for maintaining solar panels is low, it is important to budget for these as the upkeep of the panels is an essential part of owning and utilising them. 

Ensuring the solar panels are operating as efficiently as possible will enable you to maximise the savings they can provide. It would be advisable to have the panels checked by a specialist before buying the property, or at the very least as soon as you move in. You may also want to factor in the cost of cleaning the panels when required. 

Obtain Warranty and Log-In Details for the Monitoring Portal

The seller should provide you with all the paperwork you need relating to the solar panels and these can be requested by your conveyancer. If the details aren’t provided by the previous owner, you can contact the company that installed the solar panels or the manufacturer of the equipment.

It is important that you have the warranty information for all the different parts of the solar panel installation, in the event anything needs repairing in the future. Many solar panel installations come equipped with monitoring technology which requires log-in details. Again, this can be supplied by the seller or the company that installed the panels.

Next Steps of Buying a House

This article is part of our home buying guide. Paying any Stamp Duty or Land Transaction Tax will be the last thing you do after completing. Next, we look at the process of buying a second home. To read find out more read Buying a Second Home.

Adele MacGregor

Having written for PerformanceIN, WalesOnline, Grazia Magazine and The Olive Press, Adele now writes advice articles for home movers, first-time buyers and house sellers alike.