Selling Your Solar Powered Home
Having solar panels installed is similar to installing double glazing, an extension or any other home improvement; it’s expected to add value to the property. When it comes to being on-grid and part of the Feed In Tariff scheme, the extra income plus savings on the electricity bills
should make it even more desirable to a potential buyer, especially as people become more environmentally conscious. With the government’s commitment to reducing our carbon
footprint and the incentives they’re currently providing to encourage as many people as possible to join, being able to produce your own solar power is expected to become the norm. When this happens, buying a household without solar electricity will be seen as disadvantageous.
Solar As a Selling Point
It’s going to take a few years to see the full impact that solar panels, or any of the other renewable technologies for that matter, will have on house prices but there are some early indications that are worth taking note of.
Although it doesn’t involve exactly the same elements as we’re talking about in this book, if we look at the increasing number of ‘zero carbon’ apartments that are beginning to spring up it can give us an idea of how people are viewing this type of technology when it comes to house buying. It’s estimated that these properties are more likely to sell for about 2% more than their carbon producing equivalents - even without the added incentive of the Feed In Tariff payments - as these go to the landlords. This suggests that the combined benefits of a lower carbon footprint and reduced electricity bill are good enough incentives to pay extra for property. However, it seems that there is still a lot to do to make people aware of the full benefits achievable and that the majority of people buying homes are almost totally unaware of the potential of the Feed In Tariff incentive payments and focus only on the lower energy bills. This
lack of knowledge is reflected in the extra amount buyers seem prepared to pay for the inclusion of solar panels.There have been some small surveys where 33% of buyers said they would be more likely to buy a property with solar electricity but 17% said they would be less likely. Add to this the 53% that said lower electricity bills would be an influential factor and I think it’s fair to conclude that people are unaware and even confused by the potential of having a solar
powered home. One of the main problems is that estate agents have not been representing properties with solar panels as effectively as they could, with many actually ignoring the marketing potential altogether. This is set to change as electricity bills rise and people are almost forced to become aware of the benefits. The lesson to be learned is never to assume that the estate agent will market the benefits of your property’s solar system properly. All that aside, studies do show that there is a demand for homes with solar panels, which means that this added feature can and should generate more interest than those without. It’s estimated that having solar panels has the potential to sell your property 30% faster, if marketed correctly.
Help Yourself to Market Your Property Effectively
Solid proof is always good for marketing purposes so keep copiesof electricity bills from before the time the solar panels were installed to compare with bills from the same period (summer
or winter) from after the installation.
Make sure the estate agent you use includes details of both fuel savings and feed in tariff payments being received on the sales details.
A good service record will not only serve as proof of how little maintenance is required but will also validate that the system is in good running order.
Added Value For The Future
Fuel prices are rising and set to continue to do so. The Feed In Tariff is locked in to the higher payment for those meeting the right criteria prior the 2012 deadline and guaranteed by the government for 25 years. Once the next review takes place the payments will be set to reduce for those that install after the deadline. This makes your existing installation even more valuable for the future.
It’s also worth noting that suggestions are being made that the size of a household’s carbon footprint may affect the amount of Council Tax liable, similar to what’s already happening to cars – the larger the engine the higher the road tax. It’s only a proposal but it’s worth keeping an
eye on and using to your advantage when you finally come to sell your property.
Things To Consider When Selling Your Home With Solar Panels
Unlike central heating or an extension, solar panels do not offer a buyer any immediate benefit. When buying a new home most buyers are counting every penny, so to be persuaded to pay a premium for solar panels, no matter how attractive the idea, just may not work, unless the
buyer can be convinced that the future financial benefits far outweigh the immediate disadvantages. Again, that’s where proper marketing of the property comes into its own.
How Much Should The Premium Be?
If we accept that, as things stand at the moment, solar panels increase the value of the property by 2%, on a property worth £250,000 you are looking at an added value of around £5,000. There are two problems with this; the first is that the lack of awareness of the benefits of this
relatively new technology is showing that buyers are generally not prepared to pay that much for the addition of solar energy. The second is that even if they were prepared to pay an extra £5,000 it would not cover the installation costs of the solar panels, which will probably be
in the region of £10,000 to £13,000. To make selling a solar panel property worthwhile, you would
probably need to stay in your home for at least 5 years after installation in order to benefit from the Feed In Tariff and electricity savings sufficiently enough to at least recover the cost of the installation. In reality, the technology is still relatively new and the exact benefits of solar power and FITs are still unknown to the majority of home buyers so the affect it will have on house prices is yet to be seen. The conclusion is that if you are not intending to stay in your property long enough to make the investment worthwhile, there’s little point in having solar panels installed.
Take The Tariff With You
Clearly, when you move home you cannot take your solar panels with you, no more than you would expect to take your double glazing, central heating or extension. It wouldn’t be worth your while to do so anyway, as it would be considered a separate installation and you would not be
able to benefit from your previous tariff terms. The solar panels and tariff remain with the property and generally benefits are transferred to the new homeowner.
Although the panels and the electricity savings remain with the house they were intended for, it may be possible to have the Feed In Tariffs assigned to you in a similar way that companies offering free solar panels do. They install solar panels onto roofs of other homeowners for
free, but your panels would already be installed free of charge to the new homeowner.
Similarly to having free solar panels, the benefits to the buyer would be not having to pay the extra for the solar panels and still benefiting from the cheaper electricity bills.
For your point of view, as the seller, you could continue to receive the Feed In Tariff payments. As you will already know what return you are likely to achieve over the tariff term and as you wouldn’t be able to include the full price of the solar installation in the asking price for the
property, this is a good way to redeem your investment and at the same time secure an ongoing income.This option may appeal to buyers looking for a property with solar energy but without the extra finance to pay the premium. The added incentive of lower cost electricity could be a very attractive and unique selling point.There will be costs involved getting the correct documentation
drawn up and ironing out the terms and conditions that would apply. As the ownership of the panels would remain with you, the cost of maintenance and servicing remains your responsibility. Solar panels are low cost but not ‘no cost’ and some components can be expensive to repair or replace. Similarly, insurance cover and service contracts will all be affected, so professional advice from a suitable solicitor that has experience in these matters should be sought before entering in to any such agreements. Your buyers also have rights that you need to know aboutand which you wouldn’t want to infringe on.
Frequently Asked Questions About Selling Your Solar Powered Home
Q: If I choose free solar panels what impact would this have on my house price?
A: We have seen from the chapter on Free Solar Panels that these
schemes do have some benefits but when it comes to selling
your property having free solar panels could have a negative
effect on both the value of your property and ease of sale. Even
if a buyer comes along that is actively looking for a property
with solar panels, the chances are they will want to benefit
from the Feed In Tariffs as well as the reduced cost of
electricity. Worse than that is they may object to inheriting
your deal with the solar panel owners.
Q: Is it an added complication to transfer the system over to the next owner?
A: No. The system is transferred within the sale of the property and not separately.