Could solar panels put your mortgage at risk?
Solar panels are often subject to heated debate, with many arguing over whether they’re value for money. And to add fuel to the fire, our research has found that solar panels can create issues for mortgage lenders too.
Photovoltaic (PV) panels aren’t cheap – you can expect to splash out between £6k and £10k depending on the size of the system. However, anyone who can afford to pay upfront can immediately benefit from feed-in-tariffs (FIT), which pay households for any excess electricity they produce.
But what about the rest of us who can’t afford panels upfront and don’t want to take out a loan? We want to do our bit for the environment and enjoy cheaper electricity bills too. Is the answer to rent out our roofs?
Are rent-a-roof schemes worth it?
Homeowners can get solar panels at no cost through ‘free’ solar schemes, where you lease your roof to a solar firm, typically for 25 years. While homeowners benefit from reduced electricity bills, the solar firm installs and maintains the panels, making profit by exporting the power they generate back to the grid and earning money from the government’s FIT.
It sounds like a fair trade, but in September 2010, our research threw up questions around how cost effective rent-a-roof schemes really are. At the same time, our latest research into the solar panel policies of the UK’s ten largest mortgage lenders has cast a further shadow of doubt over free solar panel viability.
To lend, or not to lend?
Most lenders said applications would be accepted as long as the property’s solar panels are up to the Council of Mortgage Lenders’ (CML) minimum requirements. However, Lloyds Banking Group said it would only be willing to lend on properties where free solar panels were installed by one of its approved providers – of which there were 75 at last count.
Royal Bank of Scotland said it usually approves all mortgages for homes with solar panels bought upfront where no lease is involved, but it reserves the right to refuse applications for free schemes.
In our research, we found that Yorkshire Building Society is the only lender which considers all applications for solar panels – both leased and bought upfront – on a case-by-case basis.
Meanwhile, only Barclays and Nationwide were of the opinion that, as long as the lease is ‘acceptable’ to them, installing solar panels should not impact on a property’s valuation. Given the differing opinions among mortgage lenders, it would be a good idea to contact yours before installing solar panels.
Are you considering a rent-a-roof scheme, or have you leased your roof already? Did you have any problems with your mortgage lender?
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