We see solar panels are in the news again. Customers who took out installation loans based on projected electricity revenue are now facing shortfalls, with repayments exceeding any power cost savings. Installation companies who encouraged homeowners to borrow for systems to be fitted may soon face mis-selling Ombudsmen action.
We’ve come across installations on north facing slopes, under trees or on outbuildings and even heard of one salesman who told people that they worked at night. When questioned on this, the gentleman said that they used them on spaceships and that it was dark in space!
This could be just the tip of the iceberg, as homeowners also need to be made aware that installation of solar panels could make the property un-mortgageable.
Historically, many homeowners have elected to buy their PV system outright, albeit with borrowed funds. However, returns from Feed in Tariffs (FIT) may now be lower than anticipated, from not only actual rates paid but also technical factors such as local geography or property orientation.
The Microgeneration Certification Scheme (MCS) is the recognised installation standard and these certified systems are the only ones eligible for FIT payments. The income available for non-MCS installations is much lower, in addition to concerns about mortgage suitability.
For those who have elected to lease their panels (often for 25 years), the supplier took space on the roof and the airspace, to provide the owner with free electricity, but retained the FIT revenue for themselves. This leads to issues with legal responsibility including for the maintenance of the roof. Often, if a purchaser doesn’t want to continue the lease arrangement there will be additional legal complications and they may have to consider a completely different house.
The unsightly nature of solar panel installations could affect marketability of a property and valuers may choose to submit a lower value if the panels are dated or the roof structure is compromised. Where there is no empirical data on whether buyers will pay a premium for houses with panels, because of energy savings, or less because of the visual and legal issues, surveyors should not add a premium in the absence of verifiable market sales evidence.
Surveyors should always mention any assumptions made regarding statutory planning consents and any roof load bearing issues and refer to specific lender guidance when considering a property with PV panels. Each lender policy varies. If a property has a solar panel lease which does not contain a ‘mortgage break right’ or was not installed under an approved scheme, the lender may not accept the property as security.