This question is quite a common one – will solar panels affect the value of my home? What about when I want to sell my home or decide to let it out to tenants? What do mortgage providers think of buying a property with solar panels? These are common concerns for people considering renewable technologies for their home. Most people expect that the value of their house will increase over time. House prices rise and fall but over the distance, it is assumed that you will make a profit on the sale. Compared to last year, house prices in the UK have risen by 6.8%. What does adding renewable technologies do to the value? Does going “green” have a positive influence? Certainly a recent article in the New York Times suggests that in the US, solar panels on homes do add value.
Renewable technologies like solar panels, biomass and heat pumps still constitute a large investment for homeowners. The typical price for solar PV installation is between £6000-9000. In order to answer some of the concerns, a mortgage broker, a local estate agent and a letting agent who know the property market in Scotland provide some insight.
The Mortgage Broker
The mortgage broker we spoke to was based in Edinburgh. She believed that there could be potential issues with homes which were renting their roof out to solar companies. The so-called “rent-a-roof” scheme was popular when solar was very expensive to install. In this case, solar installers would put solar panels on the roof of your house for free in return for keeping the Feed in Tariff (FiT). The benefit to the homeowner was cheaper energy bills due to less electricity being used from the grid. However, the home owner no longer owned their roof and was, in fact, leasing it out. If the homeowner decided to move house, this would leave a difficult situation for a buyer as they wouldn’t be buying the whole house.
It also appears, according to our mortgage broker, that lenders are entirely led by surveyors. They rely on surveyor’s knowledge of green deals and renewable technologies. Since 125 000 homes installed solar in 2014, we can only assume that the views are changing. It is expected that 10 million UK homes will have solar by 2020.
The Estate Agent
When it comes to buying or selling a house with solar panels, it is prudent to think about any issues that may crop up with the sale. Local estate agent (Brenda Barclay from Miller Stewart) who has been in the property business for a number of years has experience of selling one or two houses with solar installations. In her experience, the number of homes for sale with solar panels is few and far between. She believes that the lack of properties is due to the fact that many people reside long term to recoup the initial cost of installation through the Feed in Tariff (FIT). So, in essence, it would be a wasted investment to install the solar panels and then move house. The benefits of solar panels installed on a roof are two-fold. Not only do you save money as a result of generating your own energy and therefore use less electricity from the grid, there is also the potential to earn money through the government backed FIT.
As long as the person selling the home owns the panels outright and is not leasing the roof through the “rent-a –roof” scheme, there shouldn’t be any conveyancing problems associated with the solar instalment.
Brenda also mentions that the quality of the solar panels is important. Too many installations in the earlier days of the solar boom used low quality panels whose efficiencies made it a poor investment. As a solar installer, we always discuss with our clients the quality of the panels to be installed. There are cheaper solar panels around, but it is important to consider the efficiency of the panel. And, according to the estate agent, this may impact sale price too.
With regards to marketability, as long as the solar panels are aesthetically installed, this should not affect the value of your property. A potential buyer who is educated on the benefits of solar panels will be more likely to buy a property with solar installed. Brenda describes one situation “I did recently sell a bungalow with solar panels already installed and one particular viewer was quite over the moon and quite delighted to find the property with the solar panels already installed. This was a viewer who understood the concept of how these worked. I have had no problems with the sale of the property. “
For buyers, a real benefit of buying a home with solar already installed is the higher return from the FiT. If you buy a home and the ownership of the solar panels is transferred to you, then you will be entitled to the remainder of the FiT at the original payment price. This is about 150% higher than the current FiT rate. The FiT has fallen in recent years to reflect the lower installation rates that can now be achieved.
The Letting Agent
From personal experience, I can say that renting out a property with solar panels is no problem. I recently bought a new house and have rented out my old property. My old property had solar PV panels, solar thermal panels and an air source heat pump installed; so very energy efficient. The house was rented by the first people who saw it. The benefit to them is that they get reduced energy bills, and I get to keep the FiT which is a nice income. Arden Property Management in Edinburgh, as letting agents explain, “As far as renting a property using alternative power sources like solar panels and ground source heat pumps I see no problems with this. As long as the landlord can provide adequate instruction on how to operate any alternative type of energy source then there should be no issue. Fuel is still relatively expensive and so any method which saves the householder money is going to be a big plus.”
Investing in solar for your home is good for saving you money, good for the environment and overall a good investment for the future whether you aim to stay in your home, sell it or rent it out.
Find out more about installing solar on your home by contacting us on 03308088801