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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?

Comments
Member

Surely the problem with all this is NOT to do with your current provider but with a prospective buyers lender refusing a mortgage on the property thus causing a purchase to fall through.

I think that the house itself should be indemnified by the installer and a bond put in place so that any possible future problems are covered. Perhaps this may require a trade body to ensure/insure the property.

Member

I feel that this technology is not yet proven in terms of durability so I for one will not be going down this route.

If I were to opt to go for Solar PV I would not go for the “rent a roof” schemes. The issue being detailed here is one reason. Another issue is that you do not know who will end up owning the legal interest in your installation.

These things have a habit of being sold on.

Member
Sean says:
31 May 2012

“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”

The actual way that the FIT works with solar PV is that you are paid a set amount for the amount of electricity your PV array generates (currently 21.9p/kWh). You are also entitled to a payment for the amount of electricity you export. Unless you have an export meter, it is assumed that you use 50% of what you generate and therefore export 50% which is paid to you at a rate of 3.2p/kWh.

Member

Has anyone had dealings with a company called solarson as i have had a quote today
Disney

Member
mike says:
5 March 2015

Ok so me and my partner decided to buy a house with solar panels on the roof. Turns out theres a lease first problem solicitor wanted 750 pounds plus vat pushing the total fees to nealy two thousand. The seller offered to pay this so we where ok and continued. Next problem lender wanted lease to be changed so we waited vendor got it changed then our lender said no. They where not happy with how it was worded. Solar panel company followed the guide lines so refused to change it again. So we had one choice if we wanted the house we had to go to another lender we then looked at what we could get we found a lender willing to lend. But the repayment rate was no where near as good as before 90 pounds more a month. So we decided to back out. As we felt it unfair it was like we would be paying for the panels because we could have had the deal from the first lender had there been no solar panels. So we lost money on searchs and valuation fees. My advice is simple leased solar panels on a house walk away dont pay for the vendors mistake. It was there choice not yours. I wish i knew all this before i tryed to buy the house would have saved a few bob. But hey least i wasnt stuck with a unfair mortgage rate and 20 year lease i never wanted.

Member
Techfor Energy says:
17 May 2015

Purchsed solar panels present no problems for the new owner or mrtgage company.

FREE (leased) solar panels are the ones which cause this type of problem – so ask the vendor if the own them at the beginning of your purchase stage.