How To Sell A House With Solar Panels?
Did you know that the sun produces more energy in just one hour than the entire world consumes in a year? About 430 quintillion Joules – or 430,000,000,000,000,000,000 Joules – hit the Earth each hour. Now that doesn’t mean we capture all of that energy, but even if we can capture a fraction, it adds up to a powerful (pun intended) source of clean, renewable energy. It’s no wonder that the number of solar panels is increasing in the UK. In fact, we are in the top 12 countries in terms of solar power capacity, even with our abundant cloud cover!
We see more homes with solar panel installation every year, and while a great step toward a more fuel-secure future, it does bring up an important question. How do they impact the value of your home?
This guide will discuss the answer and provide helpful information in terms of how to sell a house with solar panels.
The Use of Solar Panels In the UK
Currently, the UK produces 13,258 megawatts of electricity through solar. This is enough to power about 3 million homes. According to government statistics, approximately 3.3% of the UK’s 29 million homes (about 970,000) have solar power installations. While the push for greener resources is at work, so is the decreasing cost of solar panels. Prices have dropped by 82% in the last ten years.
We’ll answer one question that is surely top of mind for many homeowners who are considering or already have solar panels installed. Does it impact house value? Yes. The good news is that research indicates that panels increase a property’s value by up to 4.1%. Many people, including prospective buyers, consider the presence of solar panels as a welcome addition and a perk – especially in light of quickly rising energy bills.
You would think a house with solar panels would all but sell itself. This isn’t always the case, however. Why not – and what can you do to overcome challenges that may arise as you seek to find the right buyer for your property?
The FiT Scheme
In 2010, the government launched the ‘feed-in tariff’ or FiT scheme. This was designed to provide homeowners who generated renewable energy through solar panels with guaranteed income. They would receive an above-market price for energy that they delivered into the grid.
As a result of the FiT scheme, there was a big push by green energy firms. They essentially leased homeowners’ roofs for up to 25 years and installed solar panels. The benefit to homeowners was free electricity, while the company kept the feed-in tariff payments.
FiT closed to new applications in 2019. It was superseded by the Smart Export Guarantee (SEG). This scheme is not quite as lucrative for owners, but we still see demand for installation increasing.
How Can Solar Panels Impact a Sale?
For a great many prospective buyers, solar panels are a great feature and key selling point. After all, who wouldn’t enjoy low electricity bills, a reduced carbon footprint, low maintenance costs, higher property value, and money-making potential through SEG or FiT (if they joined before 2019). And should they decide to sell, the process often goes more quickly.
What could possibly be the problem? We just spoke of those situations in which companies leased solar panels to companies for periods as long as 25 years. Here is where you can encounter difficulties.
The Buyer May Not Be Able to Secure a Mortgage
Most prospective house buyers require a mortgage in order to complete a purchase. The issue here is that many lenders are hesitant to approve financing if the roof is under lease with a solar power company.
You May Not Know Who Owns the Solar Panels
This seems a little odd… how could you not know who owns the solar panels? They are on your roof! But the reality is that many of these energy companies we spoke of have gone into liquidation or out of business in the intervening years. To whom does ownership transfer? Do they still retain rights? Discovering who exactly owns these panels can be a chore, but you must find out so the FiT payments may be transferred to the property’s new owner.
The Solar Panel Owner Refuses to Consent to a Sale
You may find yourself in a situation where you need the consent of the solar panel owner in order to sell. Again, it seems a bit odd: you own this house. It is your roof. But you have agreed to lease this space. Your lease agreement will have language that indicates whether or not you must get consent.
Another potential complication is that you may also be under obligation to get consent before extending or adding to the property. This can be a deterrent to prospective buyers who want to make those types of changes.
Your Lease Is Indefinite
It seems like a great choice (and it may well be) to lease your rooftop and receive free energy. But some lease agreements permit the company to extend the 25-year term indefinitely. Could they be there forever? They might just be. Again, this can be a big ‘no’ for potential buyers as they want – understandably – to be free from constraints imposed on them via a third party.
You May Have to Pay an Early Exit Fee
It is often possible to end the lease before the full term. However, the company may charge a fee related to early exit. How much? You may be looking at thousands or tens of thousands of pounds. This may be prohibitive when all other factors in your financial situation are considered.
Whether you lease your roof or you own your solar panels, installation does complicate the sales process. There is a lot more red tape to cut through and paperwork to trudge through.
How to Sell a House with Solar Panels
First things first: get your documents and information in order. You will need to provide potential buyers with:
- Details on the installation company
- The electrical installation certificate
- Proof of planning permission and building regulation consent
- Warranties for the components of the system
- Microgeneration Certification Scheme certificate
- Details on the leasing company if leased and if different from the company that installed the solar panels
- Permission from the freeholder to install the panels, if your property is a leasehold
Gather this information before you even market your home. It is imperative that you have this documentation at hand. Expect that potential buyers will likely have a structural roof survey completed.
Now, if you own your solar panels straight out, you can always remove them and take them with you to your new house. There is nothing preventing you from doing so, and it will help make the sales process more streamlined and simple. Well… perhaps we misspoke just then: there may be something preventing you from taking your solar panels. This process can be exceedingly expensive. Further, it could cause damage to your roof, which will in turn affect your property’s value.
Because of the cost and the risk, most homeowners opt to negotiate with a buyer instead and typically cover the cost of getting a ‘deed of variation.’ This is a document that is necessary to transfer a roof lease to a new owner and costs about £200.
Selling House Fast
When you need or want to sell your home and you have solar panels, it is important that you target the right types of buyer – especially if there are some complicating factors such as those we have mentioned above.
A viable – and ultra-convenient – option is to work with a cash house buyer. This eliminates the worry you might have concerning the difficulty a buyer will face when obtaining traditional finances. A reputable cash buyer has the financial resources, on hand, that are required to make a purchase… and do so on an accelerated timeline.
How does this process work? Generally:
- You fill out a quick and easy online form, requesting an offer
- Based on information such as your location (and perhaps the age and size of the home), the buyer will return with an offer in principle. Usually, this happens within 24 hours.
- If you choose to continue, the buyer will instruct valuation professionals to conduct surveys. They may do this two separate times.
- Pending the results of these surveys, the buyer extends a formal offer. This may be the same as the initial offer or, in some cases, it may be reduced a bit to accommodate for major issues (e.g. leaking roofs, faulty wiring, etc.) that impact the value of the house.
- If you decide to continue, you accept the offer.
- The buyer works with solicitors and completes other required steps in the process. All of this – the surveys, the solicitors, Energy Performance Certificate, etc. – are costs that are borne by the buyer. You are not going to pay out of pocket for this, which can save you a significant sum of money.
- You move towards completion, hand over your keys and receive cash directly deposited into your bank account. There are no lengthy wait times. When time is of the essence, this allows you to have fast access to the funds you need to make the next move in your life.
It is also important to remember that there may be some dense legalese to wade through when it comes to rooftop lease situations. The buyer covers the solicitor’s cost so you can be sure that you are dotting every I and crossing every t. Again, this comes at no expense to you.
Be aware that a cash buyer will typically offer 80% to 85% of the total market value. Again, though, factor in the savings you realise. No estate agent fees. No solicitors’ fees. No payout for surveys or Energy Performance Certificates. You can also sell your house in its condition, so you will not have to bear the expense of costly repairs, improvements and upgrades that would be all but required by traditional buyers (and their lenders).
Solutions for Homes with Solar Panels
As more and more of us are opting to move towards a greener, cleaner energy, it is important to understand the impact solar panels can have on your house and on your ability to sell. You can sell a house with solar panels, and as it turns out, you can do so easily and quickly – when you find the right buyer.