Solar Panels and Mortgages Explained

Solar panels are now common on UK homes – and have been since 2010, when the government introduced the Feed-in-Tariff (FiT) that saw the rise of so-called Rent-a-Roof schemes.

These schemes were lucrative for installers and helped homeowners save on energy bills. However, they also tied some people into long-term leases that have created problems when it comes to buying and selling property.

In this article, we’ll look at the potential complications associated with getting a mortgage for a house with solar panels, what steps you can take to overcome them, and why a broker is the best route to finding the right lender for your circumstances.

Can you get a mortgage on a property with solar panels?

Yes, of course you can. There is no reason why solar panels should prevent you from getting a mortgage. However, potential issues could arise depending on when, how, and by whom they were installed.

Fortunately, the fact that so many homeowners have opted for solar panels in recent years has meant that both high-street lenders and specialist providers have adapted to this new element of assessing properties and mortgage applications.

However, working out what is right for you requires a little inside knowledge.

How solar panels can affect a mortgage application

There are several reasons why solar panels might affect your mortgage application, and they all stem from the installation.

Leased solar panels

Rent-a-roof schemes saw companies offer free solar panels in exchange for being able to sell the excess electricity produced. But this meant homeowners signing a lease (typically for 25 years) at the time, which can complicate mortgage applications today.

Some lenders will simply not accept applications for homes with leased panels. Many of those that do will have strict criteria, such as the unconditional right to break the lease terms in the event of repossession to facilitate a quick sale.

Depending on the terms of the lease, it may be that:

• The sellers must pay the outstanding amount left on the lease. This will add another layer of legal complexity to the sale and is enough to put some lenders off.
• The buyer is required to take over the lease following completion. This raises different legal issues, as the lender must satisfy itself that the lease is in line with their lending policy. The ongoing costs must also be factored into their affordability calculations when assessing income and expenditures.

Regardless of the above, the lease may state that the property owners are responsible for repairs to the solar panels. Again, each lender will have their attitude to clauses like this, which could affect your application’s outcome.

Some lenders will approve a maximum loan-to-value of 75% with a lease in place.

Solar panels that are owned outright

Solar panels bought outright by the current owners are less problematic but can still raise concerns for some mortgage providers.

There is a slim chance that the owners will want to remove the solar panels and take them to their new property. However, they will then be liable for the cost of roof repairs, so this is an unlikely scenario.

Presuming they don’t take the solar panels with them, you simply become the owner of said panels when you complete your purchase.

Even in these circumstances, though, lenders may want to check the warranty to ensure you can insure them. Plus, there is the issue of whether a certified company installed the panels.

Microgeneration Certification Scheme

Many problems with finding a mortgage for a house with solar panels are linked to the Microgeneration Certification Scheme (MCS) – a nationally recognised quality assurance scheme.

To be eligible for FiT, homeowners were required to use MCS-certified installers. However, those who bought their solar panels outright or via hire purchase may not have done so. While an MSC-certified installation was not mandatory, it does give mortgage lenders confidence in the installation and the products used.

Before approving a mortgage, lenders will need to check that the installation complies with guidelines (and building regulations, if applicable). Any deviance will significantly limit your choice of lenders.

Where the MCS certification status is unknown, your pool of potential lenders will be very small, and the provider’s legal team will likely need to be involved.

How a broker can help you get approved for properties with these features

The addition of solar panels to a property can sit anywhere between causing no real problems at all or a series of complex issues, according to various factors. Applying for mortgages without an expert onside can result in months of wasted time, money squandered on ultimately meaningless surveys, and multiple rejections.

All of these can hamper your chances of approval for subsequent applications.

If you’ve found a property with solar panels, seek the help of a broker right away. They will assess your circumstances, compare all possible mortgages, and let you know exactly what documentary evidence you will require for all aspects of the application, including the solar panel paperwork.

If you get in touch, we can arrange for a broker we work with who has experience in this area to contact you directly.

Which lenders offer mortgages on properties with solar panels?

Most UK lenders will consider applications for homes with solar panels, but generally with caveats.

For example:

• Halifax and Scottish Widows will not accept applications for leasehold flats where photovoltaic cells have been fitted.
• Natwest will only accept applications if there is evidence that the installation was carried out by an MCS-certified company. However, they will not accept applications for mortgages with solar panels in Northern Ireland because of legal documentation relating to roof space leasing for solar PV panels.
• Nationwide will consider applications provided the installation meets the minimum standards as laid down by the UK lending handbook.

Other lenders have their own unique requirements.

Other factors to consider

It’s worth considering your long-term plans for the property if it has solar panels. If you think removing the panels before the lease is up, this could run to thousands of pounds. Some companies will even expect you to compensate them for loss of earnings as part of the early settlement fee.

So, for example, if you intend to remortgage for home improvements in a few years, you will need to factor in the costs of ending the lease early and the removal and construction work.

Some installation firms sold leases to investment firms after the installations were complete. This can make it difficult to obtain the evidence your lender needs – especially if the installation company is no longer operating.

For this reason, it’s important to find this information out as soon as possible.

Can you remortgage to raise funds to install solar panels?

Yes. There is no reason why you can’t remortgage to raise the money to install solar panels either with your existing lender or by finding a better deal elsewhere.

You will need to inform your lender that this is your intention to ensure your new mortgage is compliant with their lending policy. It also makes sense to speak to a broker to ensure you get the best deal on this mortgage and prevent making future remortgages more challenging than they need to be.

Get matched with a broker with experience in these cases

With so many variables when it comes to getting a mortgage for a house with solar panels, the most important thing is to find the right broker.

Our broker matching service will connect you with a whole-of-market broker who has a track record of helping people in your situation. They will ensure you get the best deal without the hassle and worry of trying to negotiate with lenders, sellers, and lawyers over issues related to solar panels.

To get matched with your ideal broker, call today on 0330 818 7026 or enquire online.