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RICS Warn of Mortgage Difficulties from Free Solar Panel Installations
The RICS are warning potential homebuyers to take caution when looking at properties with ‘free’ photovoltaic panel installations. Purchasers are seeing mortgages declined or difficulties from mortgage lenders due to the way that these ‘free’ panels are leased to homeowners.
These ‘free’ PV panels installed by solar companies are usually let on long leases, usually 25 years, with the solar company selling the excess energy back to the grid, as part of the Governments Feed-in Tariff Scheme. The installation requires prior approval by the mortgage lenders, which many are refusing to give.
Buyers are more likely to to be granted a mortgage if the scheme complies with the Council of Mortgage Lenders guidance, demonstrating necessary consents have been achieved and the panels installed to an accredited standard and maintained. The compliant scheme does not guarantee that this will meet the requirements of the mortgage lender, due to the lack of regulation each application is assessed on a case by case basis.
If a mortgage is refused, one solution for the homebuyer is the option of a buy-out, for the prospective purchase this enables them to pay the price stated within the original lease agreement. This adds additional costs to the purchase of the property. In the worst cases, there is no ‘get out clause’ with the solar companies refusing to sell the installation to the new homeowner and even charging for removal.
The RICS are advising their members to inform homebuyers of the potential issues, encouraging potential buyers to discuss this with their legal advisor and lender prior to any offer.
