A Guide to Buying a House with Solar Panels
15 August 2019
With the rise in popularity of solar panels in recent years, many homes are now being sold with solar panel installations on the roof. While solar panels are very beneficial in reducing energy costs and providing a sustainable source of energy for your home, the presence of solar panels can have an impact on the Conveyancing process.
If you are planning on buying a house with solar panels, these are the key points that you'll need to consider...
Is the Property Freehold or Leasehold?
Whether the property is freehold or leasehold is a very important point to note, because the owner of a leasehold property does not have the authority to install solar panels on the roof without the freeholder's permission. If you're considering buying a leasehold property with solar panels, the freeholder will need to be contacted to ensure that the necessary permission has been obtained. The terms of the lease will also need to be carefully reviewed to ensure that installation of solar panels is permitted under the lease.
For freehold properties, this is not an issue because the homeowner owns the roof space.
Are the Solar Panels Owned Outright or Not?
Solar panels can be bought outright, but they are expensive. So many homeowners choose instead to lease out their roof space to solar panel companies. The company will then install the solar panels on the roof, but the panels themselves will remain the property of the company.
For the duration of the lease, which is generally 25 years, the homeowner will usually benefit from a reduction in energy costs. There is also the environmental benefit of switching to a renewable energy source, which is appealing to many homeowners.
If a property is sold with this arrangement in place, then the terms of the lease will be taken on by the new homeowner, who will need to be vetted by the solar panel company. Aside from this, the main consideration here is that some mortgage providers will not lend against the property without first obtaining some additional information. So it's worth speaking to your mortgage provider at the earliest opportunity to seek their consent and find out what information you need to provide.
Furthermore, the property purchase could require additional Conveyancing work to be carried out, due to the leasehold interest noted on the title. So be aware that the Conveyancing process may take longer and cost more as a result.
If a property is being sold with solar panels that are owned outright, then the process for this is more straightforward. It's likely that your property purchase and mortgage application will be able to proceed mostly in the same way as it would on a property without solar panels.
Does the Installation Meet the Recommended Standards?
The Council of Mortgage Lenders (CML) and the Building Society Association (BSA) have teamed up to put together some solar panel guidelines for installers, mortgage providers and customers. These guidelines set out the minimum criteria that solar panel installations should meet, as well as the terms required in each lease.
Providing the installation and the lease terms meet these guidelines, then most mortgage lenders will not have a problem with these. If the terms do not meet the guidelines then a lender will insist that the solar panel lease is varied. This will add time to the Conveyancing process.
Ultimately, the decision lies with the mortgage provider, and different lenders may have different policies. For this reason, it's important to speak to your mortgage provider and familiarise yourself with their policy.
Is there a Warranty on the Solar Panels?
Most solar panels will come with a warranty, so it's worth establishing whether there is one, if it is still current, and how much of the warranty remains if so.
It's also important to look at exactly what the warranty covers, as the inverter commonly needs replacing during the solar panels' lifetime, so you could find yourself out of pocket if this isn't covered. You can expect most solar panels to have a warranty of 25-30 years.