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Selling your home with a solar panel lease – not always sunshine and roses

Solar panels may be good for both the environment and your energy bills but for some homeowners they can prove to be an issue when it comes to selling up.

Sometimes, problems can arise for those who have chosen to effectively lease their roof, or part of it, to a solar power company in return for free panel installation.

This is because these roof leases affect the property title and are binding on any future buyer. Basically, the 25-year lease applies to the property whoever owns it so any purchaser has to be willing to take on the remaining years.

Background

Back in 2010, many householders decided they'd like to take advantage of government feed-in tariffs (FITs) - subsidies which guaranteed an income to those who produced their own electricity from renewable sources.

Because of the high installation costs of solar panels, some homeowners signed an agreement to lease part of their roof to one of the many solar power companies which sprang up at the time.

In return for keeping the FIT subsidies, these companies fitted the panels for free with the promise of a reduction on energy bills for the homeowners. At the end of the lease period, both the panels and financial savings would be the homeowner's. A seemingly win-win scenario.

So, why is there a problem now?

A growing number of householders who signed up to lease their roofs are discovering that when they come to sell their properties, there is an issue with the lease. As a result, they are encountering problems when it comes to selling including:

  • Discovering that building regulations were breached when the panels were installed - for example, not reinforcing the roof to take account of additional weight. A survey of the roof should be carried out prior to the installation of solar panels to ensure that the structure can take the added weight;
  • Finding it difficult to pin down who actually now owns the panels as many of the original companies have ceased trading or passed the management of the panels to another party;
  • Trying to buy out the panels from the solar power company involved in order for a sale to proceed, only to find it is demanding prohibitive compensation for the loss of its FIT payments.
  • Although the Council of Mortgage Lenders (CML) and the Building Societies Association (BSA) issued guidance for their members (most mortgage lenders) in October 2011 about their requirements in respect of Solar Panel Leases, many leases were entered into before that time and do not therefore comply with the requirements of CML or BSA

What should you do?

The first move is to check your paperwork. Most lenders will agree a loan on a property with leased solar panels provided the contract meets certain criteria. Details can be found on the Council of Mortgage Lenders and Building Societies Association websites. For instance, the installing company must be Microgeneration Certification Scheme accredited.

It's also vital to check if the installer is a member of the Renewable Energy Consumer Code (RECC), which offers re-dress if a system has been mis-sold.

Although some of these contracts can be a problematic, specialist conveyancers like Wards Solicitors will be able to advise you on the best way forward.

  • The government will stop paying subsidies on solar panels at the end of next March (2019). Any homeowner wishing to install panels before then should only get quotes from companies listed on the RECC website.

This guide is not intended to constitute legal advice and is for information purposes.

If you need help with any conveyancing issue, please contact Wards Solicitors' specialist Conveyancing team.