We are in the process of buying a house with solar panels fitted. They are fitted under what is called “rent a roof where the home owner is the landlord and the solar panel company is a tenant. We’ve had a look into this and seen that mortgage companies aren’t keen on this setup and can refuse to lend. We are in the fortunate position of being cash buyers so while it doesn’t affect us now it would make selling the property much more difficult in the future. The lease also still has 20 years left which we could buy out but would cost a fortune.
So , does anyone have any experience of this ? Is it a problem to get a mortgage or are we worrying about nothing.

The CML has a checklist of requirements for the lease to make it mortgage compliant. As long as the lease ticks those boxes there shouldn’t be an issue in the future. You need to instruct your solicitors to review the lease and tell you if it’s CML compliant.

Is the deal that the Tenant under that lease provides you with free electricity? Is there any share in the FiTs or is that all retained by the tenant?

Would there need to be additional legal work/cost on transferring the panel contract into your name, and/or could it be refused by the panel company?

If so, you’d need an overall clause that ensured you didn’t exchange house contracts and then protect you if the panel contract exchange failed.

This is handy to know for any future house purchase!

I assumed as the house owner you owned the panels etc. Not good in my opinion !

Depends how the energy supply but is structured but the lease runs with the land so you don’t need to do anything with that, you become the landlord automatically when you buy the property.

Funky there are two ways of doing it. People who could afford the costs bought the panels themselves and took the subsidies as well as the free power. People who didn’t want to pay out the up front costs rented their roof out and took the free power (but generally the company that owns the panels takes the subsidies). So it depends

I had a feeling this would come back and bite people!

Thanks for the replies. The current owner receives no payment at all. All she gets is some free electric when power is been generated. If they were owned outright I’d be OK with it as it would provide a bit of an income.

Would the contract be with the current occupants?*

If they want to sell it’s up to them to either a) buy the contract out; or b) offer a reduction in the house price to factor in the costs.

Or could you just buy the house and tell the solar company to remove them as the contract isn’t with you?

(*as far as I know houses can’t sign contracts!)

The contract (tenancy )transfers to the new owners. We could buy the lease up but the current set price is £23000 ! Even in 10 years time the buy out price is over £18000.

A £23k price reduction it is then! 😀

The lease runs with the land. It transfers automatically to the new freeholder. As the new landlord you cannot terminate it other than by agreement with the tenant (ie by buying it out) or if the terms of the lease entitle you to terminate it (because for example the tenant is in breach of its terms).

You get free power – the panels, assuming they’ve been installed properly and you get some sun, are an asset. The point about future mortgagees is a good one but as I said above you can get the lease checked to make sure it’s CML compliant and if it is I wouldn’t be too worried.

Would this also apply to solar water panels, does anybody know?

I would be looking elsewhere !

I bet when their is an issue with the roof/panels they don’t come and fix it for free?

If there’s a problem with the system then yes the company would repair it at their own cost. One of the few advantages of this lease. For the sake of a cup le of hundred quids worth of free electric I don’t see why anyone would of signed up for this. Also plenty of stories online about people struggling to get mortgages.

I would also have other concerns other than the morgage

what happens if you want to alter the property, repair the roof, change electrics

what happens if the company go bust, the panels become defective

Id run a mile from a house like this

My poor neighbour is going to have a hell of a time selling his old farmhouse when he wants to go into a care home; he’s a retired physics teacher and his house is almost completely self-sufficient with solar PV, water and ground heat, all self-installed before they became mainstream. The wiring is a mess.

Some of the above is a bit over the top.

Depending on when they were installed the company that owns the panels will be getting paid up to 50p k/w hour for the electricity. They are incentivised to come and fix them if they stop working. Like anything, if they were done properly (legally and technically) there’s not much to be worried about. If it was a botched job then it’s more of an issue. It’s easy to check. I’d be cautious about walking away just because of this before you’ve even done your DD.

Theres also the problem with home and building insurance, if they go faulty , unlikely and set fire to your home, or worse still your home sets on fire and then they may well bill you for loss of income and repairs.

There’s no problem with maintenance or insurance. The company that take the FiT have insure their system. They also carry out maintenance and repair at their own cost as it benefits them if everything is working properly.
My only real concern is the difficulty of selling on in the future. There does seem to be some mortgage lenders that won’t lend with such a lease in place.