If you’ve recently considered installing solar panels but also have concerns about what impact they may have on the value of your home, you’re not alone.
A major concern these days for homeowners who are looking to install a solar system on their property is whether the installation will put buyers off in the future or make their home more difficult to sell.
The good news is that recent evidence clearly points in the opposite direction for privately owned systems that have been properly installed. In other words, having solar doesn’t put buyers off.
Solar panels bring several benefits, including reducing household energy costs, improving the energy efficiency of a property and making a home more appealing to buyers who are looking to reduce running costs.
The key distinction is between solar panels that are owned by you, and ones that are owned by a third party through older lease arrangements. If you’re looking into solar, then it’s also worth checking out exactly how much solar panels cost in the UK before comparing the investment with the potential savings and added value.
How much value do solar panels add to a house?
There isn’t a “one-price-fits-all” answer to how much value solar panels add to a house because house prices are determined by a range of other factors, such as the size and age of the property, the current local demand, the wider housing market, and where it’s located.
In other words, solar panels are just one of several factors that must be considered when determining the true value. However, with that said, there is now growing evidence that shows homes without solar PV can sell for less than similar properties that have solar installed.
For example, the research by Solar Energy UK that was recently published in the Value of Solar Property Report (based on almost a million property transactions) highlighted a significant price premium of between 0.9% and 2% for homes with solar PV installed. These findings cross-referenced property transactions with solar installation and Energy Performance Certificate data.
However, it doesn’t mean you can simply add 2% to your home’s value as soon as solar panels are installed. The person who values your property will always consider comparable properties in the local area, and the condition of the entire home, meaning the total value will always vary somewhat from one property to the next.
There are several other reasons why buyers tend to find ones with solar more attractive than ones without, and one of the biggest draws is lower running costs. Solar systems can greatly reduce how much electricity homeowners need to buy from the grid by generating their own household electricity.
Another key factor is greater energy performance on homes with solar. Not only can solar systems help contribute to a property’s overall energy performance, but they may also help improve its EPC (Energy Performance Certificate) rating, but this also depends on the property and other adjustments that have been made.
In the valuation profession, energy efficiency is more relevant than ever to property buyers. RICS research recently highlighted the growing importance of energy performance when considering residential property value and marketability, although it does also point out that the impact it has on the value isn’t the same for every property.
There’s also protection against future energy costs
It’s almost impossible to say what household energy prices will look like in just a couple of years, let alone one or two decades from now, and so having your own source of electricity can reduce your reliance on the grid and give a homeowner a little bit more control over part of their future energy costs.
Also, a buyer isn’t solely purchasing the panels. The home that they’re buying comes with a fully functional renewable energy system already installed.
Why is it sometimes harder to sell a house with solar panels?
This question often triggers plenty of misunderstanding, and it’s typically the older “Rent-a-Roof” arrangements where the confusion often lies and where homeowner problems can stem from.
In the early days of solar, some companies offered to install panels either for free or for a knockdown price, but in return for this ‘deal,’ which was often long-term, the company retained ownership of the system and benefitted from the financial perks that came with solar installation.
When it eventually came to selling the home, arrangements like this often create complications.
A mortgage lender/buyer’s solicitor will likely need to understand various important aspects, such as what will happen to the agreement if the property changes hands, what rights the third party has over the roof/install, and who actually owns the panels.
With all this considered, the conveyance of title process would, therefore, not be as simple as a straightforward sale. This reason alone is why some homeowners still worry that solar panels could present an issue when it comes to selling their property.
It’s important to note that modern installations are bought and owned outright by the homeowner. An owned system creates zero mortgage complications and acts as a pure asset to the buyer.
There is no third-party company leasing the roof simply because the panels are there, meaning the panels form part of the home’s assets rather than being an ongoing contractual arrangement that a buyer needs to take over.
At Spartek, the solar installation is purchased by the homeowner rather than being offered through a Rent-a-Roof arrangement. That means the homeowner owns the system outright, subject to the normal terms of the installation contract and any finance arrangement they may choose.
However, it is still important to keep all paperwork safely tucked away because if you do eventually decide to sell, any potential buyers and their solicitor will likely want to see evidence that the system was installed correctly, along with any warranties and certification it also came with.
With all this in mind, it is clear that the issue isn’t “solar panels make houses hard to sell”. In contrast, it’s making sure you know exactly what you’re buying and that there is always ownership and installation paperwork readily available.
Do solar panels devalue a house?
Professionally installed solar panels that aren’t owned by the companies who installed them don’t automatically bring down the value of a house.
In fact, research already shows evidence of solar PC houses coming with a price premium, although it doesn’t mean to say it will automatically increase the value of each home.
In some cases, though, potential buyers could be more wary of homes with solar installations. For example, if shoddy electrical work was done on the original installation, or if the homeowner doesn’t have the warranties or any real evidence that it was installed by a reputable company, buyers will likely have justifiable concerns.
This is why it is always best to keep the installation certificate, relevant technical paperwork together, installation certificate, and warranties in a safe place if a professional company has installed the system.
MCS, the “Microgeneration Certification Scheme,” is a recognised certification scheme for small-scale renewable installations, which can also be important when dealing with the Smart Export Guarantee.
Solar panels on a standard home are usually straightforward from a planning perspective, but listed buildings, conservation areas and other protected properties can have additional requirements. If planning permission or another form of consent was required, make sure the relevant paperwork is retained.
Furthermore, although an older solar system isn’t necessarily a problem, many buyers may want to know its age and condition. Also, if an inverter is approaching the end of its expected working life, then a buyer may factor a future replacement into their decision.
Being honest and transparent about the age of the system and providing maintenance and warranty information can make the process far smoother.
Transferring solar panels when selling: what happens next?
It tends to be a far more straightforward process to sell a house with owned solar panels rather than a property with a third-party lease on its solar panels. Third-party ownership means the solar system stays on the property it was installed on, and unless there is a separate agreement that states otherwise, ownership passes to the new owner as part of the property sale.
As mentioned, it’s always good practice to ensure you store the following documents securely in a safe place:
- The solar installation certificate
- MCS certificate, where applicable
- Panel and inverter warranties
- Inverter instructions or manual
- Any relevant electrical certification
- Details of the installation company
- Battery documentation, if you have one
- Information about any finance agreement, if applicable
- Details of your export tariff
If the system has an MCS certificate, the person who buys the property inherits the ability to earn SEG payments, and will have to make their own arrangements with an eligible supplier, but only if the system is eligible for the Smart Export Guarantee (SEG) scheme.
The SEG is a government-backed scheme that allows eligible small-scale generators to receive payments for electricity exported to the grid. As confirmed by Ofgem, SEG rates and terms are set by the suppliers.
In other words, the person who purchases the property doesn’t simply inherit the previous owner’s existing SEG contract. Instead, they would have to get in touch with an eligible supplier and arrange the relevant registration and tariff in their own name.
Having the original MCS and installation documentation available can make that process much easier.
How solar compares to other home improvements
If your main objective is to boost the value of your property, there are many other improvements that can also have an impact on this, including getting a new kitchen fitted, having an extension on the property, a loft conversion, or an extra bathroom, and so on. Changes like these can impact how much useable space a property has, but these kinds of improvements can also take huge amounts of time to be completed, and set you back tens of thousands.
When it comes to solar PV, it’s slightly different because of the benefits a system like this can create, including increasing the property’s appeal and potential value while paying for itself through daily energy savings while you still live there.
Instead of waiting until you eventually sell your property to determine whether having solar installed was a worthwhile investment, the energy generated by your panels should help decrease your dependency on how much electricity you need to buy from the grid, saving you plenty of money over the years.
Research conducted by Solar Energy UK shows that solar PV homes achieved a statistically significant price premium, while its financial modelling also looked at the ongoing savings generated by solar systems.
The combination of lower running costs and potentially greater property value is what makes solar different from many other home improvements.
FAQs
In most cases, you won’t need to get your neighbour’s permission simply to install solar panels on your own roof.
However, depending on the property, planning rules and property rights can vary. For instance, you may need to consider additional requirements if your home is, say, listed, located in a conservation area or currently subject to other planning restrictions.
You may also encounter separate issues, especially if you’re dealing with a shared structure, boundary or party wall. A reputable installer should identify potential issues before going ahead with the solar system installation rather than leaving it for you to find out should you eventually go to sell your property.
Most homeowners don’t simply remove perfectly good solar panels simply because they don’t want them anymore. Instead, there are usually one or more practical reasons why people remove them.
One of the main reasons is that work needs doing on the roof. If the roof needs repairing or replacing, the panels may need to be removed first and potentially reinstalled afterwards.
Older systems may also need to be replaced with the latest ones. Modern solar panels can produce more electricity from the same amount of roof space, and, therefore, upgrading an older installation makes sense in situations like this.
Another reason you may come across is, as previously mentioned, the older Rent-a-Roof model, where a third party owned the panels. Some homeowners have successfully managed to deal with or ended those arrangements when selling or carrying out other work on their property.
The key takeaway is that none of this means that solar panels themselves are in any way, shape or form a poor investment.
An owned solar installation should not, by itself, prevent someone from obtaining a mortgage.
The situation can be more complicated where panels are subject to a lease or third-party ownership agreement – another reason why knowing exactly who owns the system and keeping the installation paperwork is important.
If you end up purchasing a house and it comes with leased panels, then you’ll need your solicitor to go through the agreement and check that the lender is happy with the arrangement.
Yes. Sales of properties with energy-efficiency improvements and renewable technologies already installed occur every day.
The important thing to remember is to always ensure that the proper documents are readily available, and that there are no unexpected ownership, lease or finance arrangements attached to the solar system installation.
The solar panels are simply part of the property being sold if you own them outright.
Conclusion and next steps
Houses aren’t automatically harder to sell just because they come with solar panels. Remember that the biggest cause of the saying “old solar panels are bad for resale” was factors such as third-party ownership and Rent-a-Roof arrangements, NOT homeowners owning their own systems.
Modern, professionally installed solar panels that homeowners own outright are different because you can use the electricity they generate, and you can potentially earn money from surplus electricity they generate via the SEG scheme. Plus, there’s growing evidence showing that homes with solar PV can also command a price premium.
With that said, there’s still no guarantee that solar will increase the sale price of every property, and it shouldn’t be treated as a substitute for other factors that determine property value. People who own their property and intend to stay there for a good few years should bear in mind that the combination of lower energy costs and potential added appeal can make solar a worthwhile long-term improvement.
If you’re considering solar panels for your home after weighing up all the pros and cons, don’t forget that Spartek can assess your property and design a system based on your roof, energy use, requirements and preferences.
You can also read our guide to how much solar panels cost in the UK before deciding whether solar is right for you.
