Solar panels – don't get burnt

Posted: 01/06/2012

Following the wettest April on record, the sun is shining at last. Homeowners may again be considering solar panels as a way of enhancing their ‘green’ credentials and reducing ever increasing energy bills by benefiting from Government support payments via feed in tariffs (FITs).

Typically, the homeowner grants a solar panel installer a lease over their roof space (normally for a 25 year period). Under the lease, the installer installs and owns the equipment and benefits from the FIT payment while the homeowner uses the electricity generated and/or receives rent from the installer. It sounds simple but homeowners should be aware of the pitfalls.

Practical issues: where will the panels be fitted and how (will a crane or scaffolding be needed?). What will they look like? Will they have a detrimental effect on the appearance of the property (thus affecting resale value)? Will building insurance premiums be affected? Also bear in mind that the presence of solar panels will almost certainly end or curtail the homeowner's ability to develop the roof space or develop upwards. What about repairs to the roof? The lease is likely to regulate how repairs to the roof are to be carried out and the existence of the solar panels could make such repairs more difficult/costly.
Attitude of mortgagees: if the property is mortgaged, the consent of the mortgagee will be required. Property owners should be particularly wary of this as the attitude of lenders varies considerably. It was recently reported that a couple in Southampton who installed solar panels using a similar leasing scheme (with their mortgagee's consent) found they were unable to refinance. The new lender took a different view of the solar panel lease and would not grant the new mortgage.
Effect on ability to sell: similarly, a homeowner may find it harder to sell their property. Irrespective of the visual impact of solar panels, potential buyers may be unable to proceed if their chosen mortgagee will not lend on the purchase because of the solar panels.
Lease terms: homeowners should carefully consider the terms of the lease they enter into with solar panel installers. Points to consider include the length of the lease, how the rent operates and what break rights exist. In relation to the latter, if the homeowner needs to sell or refinance their property and encounters difficulty because of the panels, they may have to exercise a break in the lease requiring them to effectively buy out the installer, a potentially expensive course of action.
Leasehold property: if the homeowners are themselves tenants, it is highly likely they will need their landlord’s consent to the installation. If the homeowners are landlords renting out their property, they will need to consider whether they intend the tenants to use the supply generated and arrange their subleases to make the best commercial arrangement they can.
Regulations: homeowners need to check that the installation meets all planning, building regulation and other statutory requirements (or at the very least ensure that the installer is obliged to and actually does obtain all the necessary consents).
Sunlight: although obvious, don't overlook the fact that solar panels require sunlight to function. Installation would not be advisable if the homeowner is aware of proposals for extensive (and high-rise) redevelopment next door! It is also worth mentioning that, at present, it is uncertain whether existing law relating to rights of light will assist homeowners faced with reduced lighting to their solar panels caused by neighbouring development. A right to light will probably not arise until the panels are installed. Therefore if, within 20 years of installation, a neighbour obstructs the light, a claim may fail on the basis that there was no right in existence to infringe.

Unfortunately, solar panel installation may not be as straightforward as property owners would like. At the very least, it is always worthwhile asking a solicitor to check the lease terms.

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