Solar Panels in Residential Transactions – Legal Must-Knows for Buyers and Sellers
With 1.5m homes now having solar panels installed, we're considering the issues this can pose for those selling or buying residential property.
When buying or selling a home with solar panels, it’s crucial to navigate the legal landscape carefully. Buyers and their solicitors will need a comprehensive set of documents from the seller, ensuring everything from installation to maintenance is in order. This step is essential to avoid any surprises and to secure a smooth transaction.
There are two different types of solar panels:
- Where the roof space is leased to a company who owns the solar panels and are responsible for them
- Where the solar panels are owned by the seller.
Selling properties with solar panels installed
It would be prudent for sellers to have documents regarding their solar panels ready as early as possible to avoid any delay in the sale completing. A seller should locate and provide the following to their Solicitor:
Documents required in all cases, whether owned or leased solar panels:
Roof Survey
This is usually prepared prior to the solar panels being installed.
Planning permission if required
Usually, where solar panels have not been erected above the ridgeline, they are considered permitted development and do not require planning permission. However, if the property is in a conservation area or permitted development does not apply, it is likely that planning permission may have been required. A seller should discuss this with their Solicitor if they are unsure.
Building Regulation approval
Building Regulation is often not required for the installation of solar panels, but a building regulation certificate for the electrical works would be.
MCS certificate
An MCS certificate is proof that the installation was installed using MCS certified products by an MCS certified installer. This is usually provided to the home owner soon after the installation.
Covenant consent if required
The deeds may require consent to external alterations. A seller should speak to their Solicitor about this if they are unsure if it is required, or if they do not have required consent. Their Solicitor can discuss the options to proceed.
Documents only required when the solar panels are leased
Lease
If the seller does not have the lease, their solicitor can usually obtain this from the Land Registry for a small fee.
Landlord and Tenant notices
These remove the requirement for a new lease to be created at the end of the term of the original lease.
Documents only required when the solar panels are owned outright:
Guarantees
A seller will need to locate the guarantee.
Feed in Tariff FIT
If the installation benefits from a Feed in Tariff (FIT), the seller will need to obtain the required form to transfer the benefit to the buyer from their energy supplier.
Loan
If the seller took out a loan on the solar panels and any remains outstanding, this will need to be repaid on or before completion of the sale. A seller should obtain a redemption statement and provide details to their solicitor.
Maintenance
Any maintenance/service contract and record.
Purchasing properties with solar panels installed
When purchasing a property which has solar panels installed, a buyer’s Solicitor will check whether the solar panels are owned by the seller or if they are leased to them by a third party who owns them.
If the solar panels are leased to the seller
If they are leased to the seller and they do not own them outright, a buyer and their Solicitor needs to consider several points:
- Are the solar panels and the lease are acceptable to a mortgage lender?
- What are the maintenance provisions for the solar panels in the lease?
- What provisions are in relation to the removal of the solar panels and at whose cost?
- What works are required to the roof of the property?
If the solar panels are owned outright by the seller
For an owner who owns the solar panels outright, they benefit from free electricity generated from the panels and any surplus electricity can be sold back to the electricity grid under a feed in tariff system (FITs).
A buyer should also consider the following when purchasing a property with solar panels owned outright by a seller:
Buildings Insurance
Ensure that their insurance company is aware of the solar panels and that their insurance is not affected and check if the insurance covers damage to the solar panels.
Structural integrity of the roof
The weight of the roof can be increased by the solar panel equipment. It is always recommend that a survey to check the roof is sound is carried out.
Microgeneration Certification Scheme (MCS)
Check solar panels are installed using MCS approved equipment and by an MCS installer. Often, unless solar panels are fitted under the MCS, many mortgage lenders will not proceed.
The Renewable Energy Consumer Code (RECC)
You should check that the provider and installer of the solar panels is a member of the Code. This can be checked online here: Renewable Energy Consumer Code (RECC)
Planning permission
The installation of solar panels is usually classed as a permitted development. If the property is in a conservation area or is a listed building, however, they would not be classed as permitted development and so planning permission would have been required. There may be other circumstances where planning permission would be required even where a property is not a listed building or in a conservation area. A buyer should discuss this with their Surveyor and Solicitor.
Building regulations
Building Regulations is often not required for the installation of solar panels, but a building regulation certificate for the electrical works would be. A buyer’s Solicitor should check this is available.
Guarantee
A buyer’s Solicitor will check if there is a guarantee available for the installation.
FITs documents
A buyer’s Solicitor will obtain a copy of the FITs paperwork for a buyer to check the bills are accurate and that the FIT is reflected in the payments. The owner of the property will be registered as the 'FIT generator' with the electricity supplier and this will need changing on completion of the sale. The buyer’s Solicitor will request the electricity supplier’s requirements to change their records and any fees involved.
To ensure a seamless transaction, it’s wise for both sellers and buyers of residential property to address the requirements for solar panels early on. Engaging surveyors for any structural concerns and informing conveyancing solicitors about the solar panels as soon as possible can help avoid delays and pave the way for a smooth and successful purchase or sale.
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