After reading an article in the Telegraph this Wednesday called: ‘When free solar panels can prove an expensive mistake.’ we’d like to stress and summarize the potential problems when installing solar panels for free on your roof. Inability to sell your house or to get a (new) mortgage are the main problem.
The concept of Free Solar is simple and attractive at first sight. When you have a (nearly) south facing roof, another company will install solar panels for free. They will keep the subsidy (Feed-in-tariffs) for the next 25 years, and you can use the electricity for free. Sounds great, but there are some major potential problems attached to this.
But according to the Telegraph: “Some properties where [free] photovoltaic (PV) panels have been installed are proving unmortgageable and unsaleable” and they continue with “An inflexible [free solar] PV panel lease, without a buy-out clause, could result in a failed [property / mortgage] transaction.” What this means is that having free solar panels on your roof could scare of potential buyers of the house or make it more difficult to re-mortgage.
The difficulty lies in leasing your roof for 25 years to a third party – which is a relatively new concept in the property world. Where a mortgage lender does refuse the mortgage on the basis of the roof-lease, the solar company may offer a ‘buy-out’ option but typical costs of over £10,000 mean you’d pay more than buying solar outright at the start (since systems are now available from £7,000)
If no buy-out clause exists installation companies could refuse to sell their kit to new homeowners and seek to charge for removing the panels and the loss of income from the feed-in tariff. This could mean the home-owner has to pay (rather than receive) up to 25 years of solar subsidy for the ‘right’ to get rid of the panels. Hence we can provide the following five tips for those that do consider free solar:
- Always ensure a buy-out clause is included in the contract
- Make sure the buy-out clause is offered at a fair market price, rather than a penalty
- Ask your mortgage provider about the implications of free solar before signing
- Stay clear of free solar if you plan on moving in the next 5 years
- Using savings (or a loan) to buy solar panels can provide an excellent alternative without the negative legal aspects of free solar