Buying a house with leased solar panels

If the panels on a roof were installed for free, the homeowner probably doesn’t own them. Under the rent-a-roof schemes that ran while the Feed-in Tariff was open, a company installed the panels at its own cost, kept ownership and collected the tariff payments. The householder got the electricity. Which? describes these as leases of 20 to 25 years, and UK Finance guidance says providers often took a lease of the airspace above the roof to protect their interest.

Most lenders’ mortgage conditions require the lender’s consent to a lease like this. That makes the roof lease the first document to ask for.

Why these leases are still around

The Feed-in Tariff closed to new applicants on 1 April 2019. Ofgem says support is payable for 20 years, or 25 in some cases, so a lease written while the scheme was open can still be running today. The Smart Export Guarantee replaced it on 1 January 2020, and free solar offers have been rare since.

What your lender will check

Lenders that use the UK Finance Mortgage Lenders’ Handbook for England and Wales work from published minimum requirements for roof leases, including a template letter that panel providers use to confirm those terms to a lender.

The terms are specific. The lease term must not exceed 30 years. It must give the landlord a right to break the lease, but only where the landlord is a mortgagee in possession, meaning a lender that has repossessed the home. That right must need at least two months’ written notice, and the landlord must reasonably believe the panels are affecting, or are likely to affect, its ability to sell. The provider must then remove the equipment at its own expense.

Four more terms matter to you directly. The provider must repair, at its own expense, any damage caused when installing, maintaining or removing the panels. Any maintenance fee must be £60 or less a year at the start of the lease, rising by no more than the retail prices index, or there must be no fee at all. The lease must allow the panels to be removed and put back for essential roof repairs, with reasonable grace periods. And it must validly exclude security of tenure under the Landlord and Tenant Act 1954.

A £60 cap is a known cost. Over 25 years it comes to £1,500 before any index-linked rises, and that is rarely the real problem. The real problem is a lease that misses one of the structural requirements, such as a term over 30 years.

What happens when you buy or remortgage

UK Finance guidance says that on a remortgage or a purchase, the lender is likely to review the lease against the minimum requirements and any requirements of its own. If the lease falls short, the lender may ask for it to be varied, or may decide not to lend on the property. A solar lease is one of several issues that can lead to that, and our guide to what makes a property unmortgageable covers the others. Individual lenders can ask for more than the minimum, and the Law Society warns that you cannot assume your lender will accept a lease just because the seller’s lender did.

Where a term falls short, the usual fix is a deed of variation, which needs the panel company to agree and sign it.

The rules above cover England and Wales. In Northern Ireland a lease of roof space is not acceptable to lenders and a lease of rights is needed instead, and UK Finance says there is at present no guidance for Scotland.

What to ask the seller, and when

The Law Society’s property information form (TA6) asks whether panels are owned outright or leased, and whether there is a maintenance agreement. It also asks how the benefit of the Feed-in Tariff or Smart Export Guarantee will pass to you on completion.

Don’t wait for that form. When you make your offer, ask for a copy of the roof lease, the provider’s name, and the consent the seller’s own lender gave at the time. UK Finance says proceeding without a required consent may breach the mortgage terms, and the lender may not be bound by the lease without it.

The lease stays with the property, so a seller’s comment that the panels can simply be bought out is something to see in writing before you exchange. Ask for the figure and the provider’s confirmation, not a verbal assurance.

Send the lease to your conveyancer in the first week and ask for a specific report against the UK Finance requirements rather than a general comment on the panels. If you are still choosing who to instruct, our guide to how to choose a conveyancer covers what to compare, and our conveyancing service can match you with a firm.