Selling a House with Leased Solar Panels
Selling a house with leased solar panels? Discover what paperwork buyers and mortgage lenders may need and how to avoid costly delays when selling your home.
Selling a Home with Leased Solar Panels? Why Having the Right Paperwork Ready Could Save Your Sale
If you're thinking of selling your home and have leased or rented solar panels on your roof, there's something important you need to consider before putting your property on the market: your paperwork.
Solar panels can be a great feature for a home, offering potential savings on electricity bills and improved energy efficiency. However, when the panels are leased rather than owned outright, they can sometimes create complications during the selling process, particularly when a buyer needs a mortgage.
Some mortgage lenders have strict requirements regarding leased solar panel agreements, and certain contracts may not meet their lending criteria.
This means a buyer could fall in love with your property, have their offer accepted and begin the mortgage process, only to discover that their chosen lender is unwilling to lend because of the solar panel lease.
The good news? Being prepared and having the correct documentation available from the outset can help avoid unnecessary delays and reduce the risk of your sale falling through.
Why Can Leased Solar Panels Cause Problems When Selling?
When solar panels are leased, the homeowner doesn't necessarily own the panels themselves. In many cases, a solar panel company has a long-term lease over part of the roof, sometimes lasting 25 years or more.
These arrangements are often referred to as rent-a-roof schemes.
Although homeowners may benefit from electricity generated by the panels, the solar panel company retains certain rights under the agreement.
For mortgage lenders, the concern isn't usually the solar panels themselves. It's the legal agreement attached to them.
Lenders need to be satisfied that the lease doesn't adversely affect their security over the property. They may have specific requirements relating to access, maintenance, roof repairs, insurance and what happens if the property is repossessed.
Not all lenders refuse mortgages on properties with leased solar panels, but their requirements can differ significantly.
That's why identifying potential issues before finding a buyer is so important.
What Should Sellers Prepare for Potential Buyers?
If you're selling a property with leased solar panels, putting together a Solar Panel Information Pack can make a real difference.
Here are some of the key documents and details worth gathering before your property goes on the market.
1. The Original Solar Panel Lease Agreement
This is arguably the most important document.
It explains the terms of the arrangement, including who owns the panels, how long the lease lasts and the responsibilities of both the homeowner and the solar panel provider.
Your buyer's solicitor and mortgage lender may need to review this agreement to establish whether it meets the lender's requirements.
2. Details of the Solar Panel Provider
Have the company's name, contact details and any relevant agreement references available.
If questions arise during conveyancing, having this information ready can save valuable time.
3. Confirmation of How Long Is Left on the Lease
Potential buyers will want to understand how many years remain on the agreement and what happens when it ends.
Some leases can run for decades, so this is important information for anyone considering purchasing the property.
4. Land Registry Documents
Where the solar panel lease is registered against the property, relevant Land Registry documents can help the buyer's solicitor understand the legal arrangements.
Your conveyancing solicitor can advise which documents are required.
5. Any Deeds of Variation
A deed of variation is a legal document that changes the terms of an existing agreement.
Some solar panel leases have been amended to address mortgage lenders' concerns.
If your agreement has previously been varied, make sure you have a copy of the relevant documents.
If it hasn't, your solicitor may recommend reviewing the agreement to establish whether changes are needed.
6. Maintenance and Repair Information
Who is responsible if the solar panels stop working?
What happens if the roof needs repairing?
Who pays for removing and reinstalling the panels if roofing work is required?
These are all questions potential buyers may ask, so having clear information about maintenance responsibilities is helpful.
7. Installation Certificates, Warranties and Insurance Details
Gather any paperwork relating to the installation, warranties, guarantees and insurance arrangements.
These documents can provide reassurance about the installation and clarify responsibilities if something goes wrong.
8. Information About Electricity and Financial Benefits
Buyers may be interested in understanding the benefits of the existing solar panel arrangement.
For example:
Does the homeowner receive free or discounted electricity?
Who receives any Feed-in Tariff payments?
Are there any ongoing charges?
What benefits, if any, will transfer to the new homeowner?
Providing accurate information helps potential buyers understand what they're purchasing.
9. Buyout or Termination Options
Some solar panel providers may offer the opportunity to purchase the panels outright or terminate the agreement.
However, this isn't always possible, and there may be significant costs involved.
Contacting the provider early to understand the available options can be particularly useful if a buyer's mortgage lender raises concerns.
10. Evidence of Previous Mortgage Lender Consent
If the mortgage lender originally gave permission for the solar panel installation and lease, keep a copy of that consent if available.
Although previous consent doesn't guarantee that a future buyer's lender will accept the agreement, it can form part of the supporting documentation.
Why Waiting Until You've Found a Buyer Could Be Risky
Imagine this scenario.
You've put your property on the market, found a buyer and agreed a sale.
Your buyer has instructed a solicitor, applied for their mortgage and started paying for searches and surveys.
Several weeks later, their mortgage lender reviews the solar panel lease and decides that certain clauses don't meet its requirements.
Suddenly, your sale is at risk.
Your solicitor may need to contact the solar panel company to request changes to the lease. This could involve additional legal work, costs and potentially lengthy delays.
In some cases, the buyer may need to approach a different lender. In others, the transaction may not be able to proceed.
And if you're buying another property yourself, the problem could affect the entire chain.
All because an important document wasn't reviewed early enough.
What Can Sellers Do Before Putting Their Property on the Market?
The best approach is to be proactive.
Start by contacting your solar panel provider and requesting a complete, up-to-date copy of your agreement, together with any supporting documents.
Next, consider asking your conveyancing solicitor to review the lease before you market your home. They can help identify potential concerns and advise whether any further action may be needed.
Finally, make sure your estate agent knows that the property has leased solar panels.
Being transparent from the beginning means potential buyers can discuss the arrangement with their mortgage adviser and solicitor at an early stage.
It doesn't guarantee that every lender will accept the lease, but it can significantly reduce the likelihood of discovering a problem late in the transaction.
Preparation Could Make All the Difference
Selling a home can be stressful enough without unexpected complications appearing halfway through the process.
For properties with leased solar panels, having the right documentation ready is about more than simply being organised.
It's about giving potential buyers the information they need, allowing mortgage lenders to assess the agreement and helping the conveyancing process move forward as smoothly as possible.
As mortgage lenders continue to apply their individual criteria to properties with leased solar panels, sellers need to understand that an agreement which caused no issues when they purchased their home may not automatically be acceptable to their next buyer's lender.
The earlier you identify a potential problem, the more opportunity you have to address it.
Thinking of Selling a Property with Leased Solar Panels?
Before putting your home on the market, take the time to gather your solar panel documentation and establish exactly what agreement is in place.
Speak to your solar panel provider, seek advice from a conveyancing solicitor and make sure your estate agent is fully informed.
A little preparation at the beginning could help prevent weeks of delays, unexpected costs and the disappointment of a sale falling through.
Remember: Don't wait until you've found a buyer to start looking for your solar panel paperwork. Get ahead of the process and give your sale the best possible start.
Disclaimer: This article provides general information for homeowners in England and Wales. Solar panel agreements and mortgage lending criteria vary, so independent legal advice should always be sought regarding individual circumstances.
