Buying a house with Solar Panels: What should you check before you commit?

Solar panels are no longer an unusual sight on residential properties. With energy prices, environmental concerns and home efficiency all firmly on buyers’ minds, a property with solar panels can look attractive.

However, as with many features of a house, the important point is not simply whether the panels are there but how they perform and what legal, practical and financial arrangements sit behind them. A solar panel system may be a useful asset but it can also create extra questions for your conveyancer, your mortgage lender and your surveyor.

Are the panels owned or leased?

This is usually the first question to ask. Some solar panels are owned outright by the homeowner while others will have been installed under a roof-space lease or so-called ‘rent a roof’ arrangement.

Solar panels owned outright

In this situation, provided the installation paperwork is in order, the panels will normally pass to the buyer as part of the property sale. If you are the purchaser, you will want confirmation that the system is included in the fixtures and fittings, that any warranties can be transferred, and that any Feed In Tariff (“FIT”) payment arrangements can be put into your name.

Solar panels that are leased

Where there is a ‘rent a roof’ arrangement, a third-party company may own the panels and have rights over the roof for a long period, often around 20 to 25 years from the time of installation. That can be perfectly workable, but the lease must be reviewed carefully. Your mortgage lender may also have requirements about the form of the lease before the lending is agreed.

What paperwork should be available?

Your solicitor will usually raise specific enquiries about the solar panels. The seller should be asked to provide the installation documents, ownership documents, warranties, maintenance information, evidence of compliance with building regulations where applicable, and details of any Microgeneration Certification Scheme certificate.

If the panels are subject to a lease, the lease itself should be supplied and checked. Important points include who is responsible for repair and maintenance, what happens if the roof needs work, whether the panels can be removed temporarily, whether the lease can be transferred, and whether there are any payments or penalties involved.

Missing paperwork is not just an administrative nuisance. It can delay exchange of contracts and, in some cases, cause a lender to ask further questions or decline to proceed until the position is clarified.

What should your surveyor check?

The legal position is only part of the picture. A surveyor should be asked to comment on the condition of the roof and whether there are any obvious issues arising from the installation.

Solar panels add weight and may make future roof repairs more complicated. If the roof is old, damaged or close to needing replacement, the cost and inconvenience of removing and refitting panels should be considered before you buy. You should also ask whether the roof warranty, if there is one, has been affected by the installation.

What are the likely financial benefits?

The most obvious benefit is reduced electricity bills. The amount saved will depend on the size of the system, how much electricity the household uses during daylight hours, whether there is battery storage, the orientation of the roof and the condition and efficiency of the panels. It may sound a little simplistic but it is also important to be sure whether the panels only provide hot water and heating for the property or whether they also satisfy the rest of the household’s electricity needs.

There may also be payments for electricity exported to the grid. Older systems may still benefit from the FIT, although that scheme closed to new applicants in 2019. Newer arrangements may involve the Smart Export Guarantee, under which participating energy suppliers pay for eligible exported electricity.

Do not assume that the income will automatically come to you on completion. The relevant contract or account may need to be transferred and the seller should confirm what payments have been received and what steps are needed to update the ownership records. This is not something your lawyer will generally assist with as it is not a legal issue and the transfer involves the completion of supplier specific forms and the submission of meter readings, usually online, on the day the transaction completes.

Does it matter when the panels were installed?

Potentially, yes.

The installation date may affect the age and performance of the panels, the availability of warranties, whether the system qualified for the FIT and what documentation should exist. Solar panels can last for many years but their efficiency may reduce over time and associated components, such as inverters or batteries, may need replacement before the panels themselves.

The date may also help identify whether the system was installed during a period when roof-space lease schemes were common. If so, the lease terms deserve particular attention.

Are all solar panels the same?

No. A buyer does not need to become a technical expert but it is useful to understand that systems vary.

Panels may differ in capacity, efficiency, age, manufacturer and layout. Some systems include battery storage, allowing electricity generated during the day to be used later. Others simply supply the property when generation is available and export surplus electricity to the grid. There may also be differences in the inverter, monitoring equipment and maintenance requirements.

For practical purposes, the key questions are whether the system is safe, properly documented, transferable, insured, and capable of providing the benefit you expect.

Will your mortgage lender be concerned?

Possibly. Lenders are generally more comfortable where panels are owned outright and the paperwork is complete. Leased panels can require more detailed checks because a third party may have rights over part of the property.

If you are buying with a mortgage, your conveyancer will need to ensure that the lender’s requirements are satisfied. This should be addressed early, not left until shortly before exchange.

What if you want to install solar panels after buying?

If a property you are buying does not already have solar panels but you would like to install them, it is sensible to consider that before you commit to the purchase.

Many domestic solar panel installations fall within permitted development rights, but there are exceptions and conditions. You should check whether the property is listed, in a conservation area, in a World Heritage Site, subject to an Article 4 direction, or affected by any planning or title restrictions. You should also check the title deeds for restrictive covenants which might require consent before altering the roof or changing the external appearance of the property.

If the property is leasehold, shared ownership, or part of a managed estate, you may also need the landlord’s, freeholder’s or management company’s consent. In some cases, the roof may not belong to you in the way you assume, particularly with flats.

Practical questions to ask before exchanging contracts

• Who owns the solar panels?
• Are the panels included in the sale?
• Is there a roof-space lease or finance agreement?
• Is there an MCS certificate or equivalent installation documentation?
• Are there warranties, guarantees or maintenance records?
• Has the system been insured and is cover transferable?
• Are there Feed-in Tariff or Smart Export Guarantee arrangements?
• Does the mortgage lender accept the legal arrangements?
• Has the surveyor considered the condition and suitability of the roof?
• Are any consents needed for future repair, replacement or removal?

Final thoughts

A house with solar panels can be a very attractive purchase. Lower energy bills, potential export payments and improved energy efficiency are all genuine advantages.

But the benefit depends on the detail. Before buying, make sure the ownership position is clear, the paperwork is complete, the roof is suitable, and your lender is satisfied. If you are buying with a view to installing panels later, check the planning position, the title, any covenants and any landlord or management company requirements at the outset.

This article is intended as general information only. If you are buying a property with solar panels, or a property where you hope to install them, you should take advice on the specific title, contract documents and circumstances of the transaction. The residential property specialists at Fraser Dawbarns will be happy to help.  For individual advice please complete our contact form and we’ll be in touch.

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This article aims to supply general information, but it is not intended to constitute advice. Every effort is made to ensure that the law referred to is correct at the date of publication and to avoid any statement which may mislead. However, no duty of care is assumed to any person and no liability is accepted for any omission or inaccuracy. Always seek advice specific to your own circumstances. Fraser Dawbarns LLP is always happy to provide such advice.