If your home has leased solar panels, selling it can be a bit more complex compared to a property without solar panels. A solar panel lease means the panels are not owned outright, and transferring that lease to a new owner can require extra steps, potentially affecting how attractive your property is to buyers. Our article will run through what you need to know about solar panel leases and how they can impact your house sale.
What is a Solar Panel Lease?
A solar panel lease is an arrangement in which a third-party company instals solar panels on your property, and you pay for the power generated or rent the equipment rather than owning it outright. Typically, these leases are long-term (20 to 25 years) and come with fixed or slightly escalating monthly payments. This arrangement can be attractive because it allows homeowners to benefit from renewable energy without the upfront cost of purchasing solar panels.
While this has clear benefits for saving on electricity bills, things can get more complicated when it comes time to sell your home.
How Solar Panel Leases Affect Your Home Sale
Selling a home with leased solar panels comes with some unique considerations that both you and potential buyers will need to understand:
1. Transfer of Lease Agreement
One of the biggest impacts of selling a home with a solar panel lease is transferring the lease to the buyer. The buyer will need to agree to take on the remaining lease term, which means they will need to qualify for the lease in much the same way they qualify for a mortgage. This can make the sales process more cumbersome if buyers are hesitant about taking on this additional commitment.
2. Buyer Willingness
The presence of leased solar panels may make some buyers wary. The commitment to monthly payments can be a deterrent for those who don’t fully understand the benefits of solar energy. For others, however, the thought of reduced electricity bills is a significant perk. As the seller, you need to be prepared to present the benefits and ensure all lease documents are in order to make the transfer as seamless as possible.
3. Mortgage Approval Complications
If the buyer is interested but plans to get a mortgage, the lender may have some reservations about the solar lease. Mortgage lenders want to ensure that no third party, such as a solar leasing company, has a claim on the property. As a result, they may ask for additional documentation, and some buyers may even need extra time to secure lender approval for the purchase.
4. Impact on Valuation
The valuation of a property with leased solar panels can vary. Some valuers may view leased panels as adding value due to potential energy savings, while others might see it as neutral or even slightly negative because of the lease obligation. It’s helpful to have records of energy savings to present to valuers and prospective buyers to show the benefits of the lease.
Advantages and Challenges of Selling with Leased Solar Panels
To fully understand how leased solar panels might affect your sale, we have broken down both the advantages and challenges involved.
Advantages
Lower Utility Bills: Leased solar panels mean lower electricity bills for the household, which could be an attractive selling point, especially with the rise in energy prices.
Environmentally Friendly: Many buyers are now actively looking for homes that are eco-friendly and energy efficient, and solar panels can be an important part of that appeal.
Challenges
Transfer Issues: As previously mentioned, transferring the lease is not always straightforward. Buyers must meet the solar company’s credit requirements, which can cause delays.
Buyer Hesitancy: Some buyers might not be keen on committing to a lease, particularly if the payments are significant or they feel uncertain about the long-term benefits.
How to Prepare to Sell Your Home with Leased Solar Panels
If you’ve decided to sell your home and you have leased solar panels, preparation is key. Here are some practical steps to make the process smoother:
Contact the Leasing Company Early
Before listing your property, contact the company you lease the panels from to understand the procedure for transferring the lease. They can provide information on what buyers will need to do and any costs associated with the transfer.
Have All The Documents Ready
Be prepared with all relevant paperwork, such as the original lease agreement, a record of monthly payments, maintenance details, and documents outlining energy savings. Being transparent and proactive will help ease buyer concerns.
Highlight the Benefits
Make sure your estate agent highlights the benefits of having solar panels during the marketing process. Potential buyers may be more likely to see the solar panels as an asset if they are informed about the monthly savings on energy costs and the environmental benefits.
Offer Buyer Assistance
Some sellers opt to cover a portion of the lease payments as an incentive for buyers. While this isn’t always necessary, it could help facilitate a quicker sale if the lease is particularly expensive or if buyer hesitancy is a major hurdle.
Alternatives to Transferring a Solar Lease
If transferring the lease seems problematic, you have other options:
Buy Out the Lease
In some cases, you can buy out the remaining term of the lease. This means you would own the panels outright, making the home more appealing to buyers. However, this option can be costly, depending on how much time is left on the lease.
Include Lease Payoff in Sale Negotiations
Another approach is to include the cost of paying off the lease in the property’s sale negotiations. This way, buyers do not need to worry about assuming a lease, but the cost would likely be factored into the sale price.
FAQs
Can leased solar panels be removed when selling a house?
It is possible to remove leased solar panels, but it can be quite costly. You’ll need to consult your leasing company to discuss termination fees and removal costs, which can be substantial.
Does having solar panels increase the value of my home?
It depends. Owned solar panels usually add value, while leased panels can vary in their impact. Buyers who are comfortable with leases may see it as an advantage, while others may be hesitant.
What happens if the buyer doesn’t qualify for the solar lease?
If the buyer doesn’t qualify for the lease, you may need to seek another buyer or consider buying out the lease yourself. This can slow down the sales process.
How much does it cost to buy out a solar lease?
The cost to buy out a solar lease varies widely and depends on factors such as the age of the panels and the remaining term of the lease. Contact your leasing company for specific details.
Do I need to notify my estate agent about the solar lease?
Yes, always inform your estate agent if your home has leased solar panels. This ensures they can provide accurate information to potential buyers, which can prevent misunderstandings later on.
Michael Anthony Estate Agents
Selling a home with leased solar panels might seem challenging, but with the right guidance, it doesn’t have to be. At Michael Anthony Estate Agents, we have extensive experience in handling the sale of many types of homes. Our knowledgeable team will work closely with you to navigate the process smoothly and highlight the benefits of solar energy to potential buyers, ensuring your home stands out in the market.
We provide a full range of estate agent services, from valuations and marketing to negotiation and closing the deal. With our local expertise and personal approach, we aim to make selling your home a stress-free experience, even when unique challenges, such as solar leases, are involved.
If you’re looking to sell your home or simply want advice about how a solar panel lease might affect your sale, please reach out to Michael Anthony Estate Agents. You can get in touch via our online contact form, or by calling your local branch and one of our friendly team members will be happy to assist.