Nikki Dunderdale pictured by the house with Solar Panels on Manor Farm Road, Middleton Leeds.20th August 2018 ..Picture by Simon Hulme
When a tenant asked if she could have “free” solar panels fitted to the roof of a rental property owned by Nickie Dunderdale, the answer was “yes”.The tenant explained that the panels wouldn’t cost anything as the installer would, instead, take the government feed-in tariff payments in lieu and, in return, the property’s electricity bill would be lower.“There didn’t seem to be any harm in it and I was happy to help the tenant reduce the electricity costs. I looked at the paperwork carefully and it seemed to be fine, so I signed it,” says Nickie, whose altruistic gesture turned into a nightmare when she came to sell the property.
Like many homeowners who agreed to free solar panels in the rent-a-roof boom, she struggled to sell her end terraced buy-to-let in the Middleton area of Leeds. Two sales fell through and it took her nine months to sell in what was an active market.That’s because many lenders refuse to issue a mortgage on a property with solar panels fitted by providers, who lease the air space above the roof in order to claim lucrative government feed-in tariffs.This lease affects the property title and is binding on any future buyer, which is seen as a risk by many mortgage companies.Even if a lender agrees a mortgage, the seller has to pay the solar panel provider for a deed of variation on the rent-a-roof lease to transfer it to the new owner of the house. These documents usually cost between £100 and £200.A rash of rent-a-roof solar panel firms sprang up in 2010 to cash in on the generous FIT payments and the practice continued until the feed-in tariffs were lowered in 2016. The Government scrapped them altogether in March this year but the unintended legacy continues.FITs were fixed for up to 25 years, which means that solar panel firms continue to earn from them while would-be home sellers and buyers are struggling with mortgage blight.
Buying out of the rent-a-roof contract is rarely financially viable as there is a clause that states you have to compensate the company for loss of feed-in tariff, which is about £1,000 a year on the average three-bedroom home.While many rent-a-roof companies were initially unaware of the future mortgage issues, Nickie Dunderdale believes they should take responsibility in raising awareness and providing help and advice to homeowners who need to sell.“I thought I was doing the right thing by making the property more energy-efficient and I had absolutely no idea what the consequences would be.“I tried asking the company that provided the panels for help and got nowhere. They were really unsympathetic.”Nickie had an offer on her property straight away but the buyers dropped out after failing to find a mortgage provider. She eventually sold to a cash buyer who was unaffected by lending constraints.“The first person who wanted to buy the house was turned down by four mortgage lenders because of the free solar panels and by this point I had given my tenant notice to leave so I ended up losing a lot of rental income,” says Nickie.Mortgage consultant Andrew Milnes, of the Mortgage Advice Bureau in Bingley, helped advise Nickie by giving her a list of the small number of lenders willing to grant a mortgage to would-be buyers.He too believes that there should be a public awareness campaign, funded by firms who receive the solar panel feed-in tariffs, to warn homeowners about the finance issues.“Free solar panels are notthe dream homeowners were sold. They can cause problems for buyers when looking for a mortgage,” he says.
Help and advice
He suggests that sellers arm themselves and their estate agent with information before they put their property on the market.“Make the estate agent aware so they can inform buyers and also get expert advice from an independent mortgage consultant on which lenders are likely to offer a mortgage on a property with solar panels installed on a rent-a-roof basis.“You should also explain that you will organise and pay for a deed of variation,” says Andrew, who ends on a positive note: “There can be benefits if the solar panel system is a good one. If electricity costs are lower than average, then that could be seen as a selling point.”While rent-a-roof is dead, beware of of “free solar panels” often advertised on social media.Last year, the Advertising Standards Authority upheld two complaints against Watts Marketing for a paid-for Facebook ad for “free” Solar Panel Funding.The ASA said the Facebook post was principally for a lead generating firm that provided consumers’ contact details to other companies.The ASA saw no evidence that members of the public had received grants or funding for solar panel systems.