There are mounting concerns over solar panels which have been installed for 'free' and could make the property hard to sell and impossible to remortgage. The Royal Institution of Chartered Surveyors alerted homeowners about this back in October, and as the mortgage market has continued to tighten, they are renewing their warnings.
So what's the problem?
The problemThe issue here is where solar panels are installed for 'free'. In fact they are installed on long leases, which means the installation firm owns the space above the roof space for roughly 25 years. The homeowner can use energy generated from the panels (a saving of about £180 a year) and the installation company can sell the rest back to the national grid under the feed-in tariff.
Some mortgage companies are happy with this arrangement, but for others, it breaches their mortgage terms and conditions. This has two potentially nightmarish results.
RemortgageFirst is that you could struggle when it comes to remortgaging. David Dalby, RICS Director, says: "While we wholeheartedly support the use and production of green energy, it is important that consumers are aware of the potential dangers before entering into these agreements."
"Leasing roof space can generate much-needed additional income for households. However, anybody considering it should consult their mortgage provider and seek legal advice beforehand. The terms of the lease may not be acceptable to all lenders, so some homeowners could find themselves in the extremely difficult position of being tied to a long-term lease, yet in violation of the terms of their mortgage."
SellingThe second problem, which has featured in a number of reports this week, is that it could be off-putting for buyers, who are concerned that they may not get a mortgage. Some surveyors are drawing attention to this when a buyer does their survey, and buyers are backing off.
Sellers do have some options. In some instances there is a buy-out clause, which enables them to regain ownership of the area above the roof space. However, they will have to spend over £10,000 in many cases to buy themselves out of the deal.
Other deals have no such clause. In the worst case it may stop your home selling. Alternatively, you can pay to have the panels removed and to compensate the company for their loss of income. Even in the best case scenario it could mean taking a serious cut in price in order to tempt a buyer to take on a property with this sort of drawback.
- Always obtain your mortgage lender's consent and seek legal advice on the terms of any agreement before entering into a contract
- If looking to sell your property within the duration of any lease, be aware that the lease may have to be taken on by a future buyer, whether they want it or not. This could affect saleability.
- If consumers sign the agreement outside of the company's premises, there is a seven day 'cooling off' period allowing the contract to be cancelled