With climate change a major political issue, politicians of all persuasions are publicly committed to moving away from carbon-based fossil fuels and towards clean energy in general and renewable energy in particular. As a part of this movement, the UK government introduced Feed-in Tariffs, which essentially guaranteed an income to people producing electricity from renewable sources such as, but not exclusively, solar panels. The FIT scheme was launched in 2010 and is due to close to new applications in 2019.
The FIT problem
Although environmentalists might argue that no matter how much it costs to set up the infrastructure to produce clean, renewable, energy, the cost of not doing so will inevitably be higher, the fact still remains that there is an upfront cost involved in setting up renewable energy plants of any description and for some people that cost can be prohibitively high. The private sector therefore stepped in and some companies began to offer schemes in which a home owner could have solar panels installed for free and could make use of the electricity they generated, while the company which installed them would keep the income from the FIT scheme. As the old saying goes, however, there’s no such thing as a free lunch and the price of the free installation was a commitment to host the panels for an agreed length of time. This might not sound like much but the key point to remember is that the contractual commitment to host the panels has to be passed on to the new owner and while this might not sound like a big issue to you or even to them, their mortgage lender might disagree.
The solar panel problem
According to the Council of Mortgage Lenders and the Building Societies Association, it should be perfectly possible for buyers to get a mortgage on a property with leased solar panels, provided that the panels conform to minimum standards which it has published as industry guidelines. Guidelines, however, are just that, pieces of advice, not firm requirements. In other words, each lender will have its own policy on the matter and some may be more accommodating than others.
Mortgage brokers may be able to help
Mortgage brokers are, essentially, experts in mortgages and it is, quite literally, their job to know the mortgage market inside out and to go way beyond the standard high street products and into more niche areas. They may therefore be able to help find a lender who will accept the presence of leasehold solar panels on a property.
The home owner could buy out the leasehold
This is not 100% guaranteed, but it is certainly worth a look and even if there is not a specific clause in your agreement which allows you to do this, there is nothing to stop you from asking. The issue here is that the cost of buying yourself out of the lease could be very expensive. The company fitted the solar panels for free on the assumption that they would benefit from the income generated by the FIT scheme, therefore it would probably be safe to expect that you would need to compensate the company to the tune of the income they would have received had the arrangement continued, possibly plus admin fees. Depending on the market situation in your area, you might or might not be able to recover this expense by an increase in the sales price of your home. You would, however, be able to advise potential buyers that the panels were yours and that the home was being sold free from any contractual obligations relating to them, so they could expect to be able to apply for a mortgage as normal.