Thu 22 Dec 2016
With almost 20 years experience valuing property in the Burton area and as a member of the National Association of Estate Agents, Phill Sandbach Director of John German Estate Agents gives his point of view on whether or not solar panels can add value to your property.
The move towards greener energy has seen a massive growth in the popularity of Solar PV installations on residential properties.
As estate agents, we are often asked whether such installations add value to the property when selling in the open market.
This is a hot topic and the answer is far from clear depending on if you ask solar panel installers, estate agents, surveyors or mortgage lenders.
Many factors come into play such as the age of the installation and level of Feed in Tariff, the type of ownership and most importantly the view of the prospective purchaser. Some buyers would never look at a property with Solar PV purely from an aesthetic point of view, whilst others with a greener perspective may be attracted purely because of it.
Effect of solar panels on mortgage decisions
An important consideration is the ownership of the installation itself, as this will impact on who has the benefit of the Feed in Tariff and may effect lending decisions when it comes to a buyer’s mortgage.
Where the panels are owned outright by the seller of the property, the only effect they will have on a lending decision will be the extent to which valuers assess them as adding value or detracting from it. Whilst the panels provide cheaper electricity and potentially a substantial income over 25 years, (depending on the level of the Feed in Tariff) it is not capitalised as value like a rental income would be on a commercial property for instance.
However, where the seller has granted a lease to a solar panel provider to install panels in return for cheaper energy, the panels and importantly the Feed in Tariff remain the property of the panel provider making the installation in effect a lease of the airspace above the roof. In this case arranging a mortgage on the property can be problematical and whilst The Council of Mortgage Lenders have provided guidance it is important to check the details of the lease with your existing mortgage provider and solicitor before proceeding.
The terms of the lease will apply to the new buyer and effect any new lender who subsequently looks to mortgage the property. It could be argued that in this latter case the value could be seriously affected if the property is rendered unmortgage able.
Consider the investment return or payback
Since the introduction of solar panels the Feed in Tariff paid by the energy companies under the government scheme have been dropping from an initial 46p per Kwh to nearer 14p per Kwh whilst the actual installation cost has also fallen, meaning the investment return or payback over 25 years also needs to be considered.
Since many owners installing the system did so based on a long-term payback i.e. 25 years, so far there has not been sufficient numbers of properties sold in the open market to make a serious price comparison against similar properties without Solar PV.
If green energy is important to a buyer all other factors being equal, then they may be persuaded to pay a higher price, other buyers I am told would never consider a house with a PV installation purely from an aesthetic perspective. Hard evidence of an uplift in value is hard to come by and remains anecdotal.
Selling or buying a property with Solar PV?
Locally I have sold a reasonable number of properties over the last few years with PV installations and have built up an understanding of the terms and conditions applying.
When deciding to sell your property with Solar PV it is important to choose an agent who understands the installation and can advise and market the property in a positive way.
"Having met with agents from 5 different companies in the past 48 hours, I am happy to feed back that you have acted in the most professional and friendly manner of all of them... I'd be happy to recommend you based on my experience."