Solar Panel return ££ and house price question....

rags2riches_2

We have made an offer on a house and are currently negotiating with the vendor and mutually agreeable price.

One major part of the vendors valuation is the property has solar panels that were initially guaranteed for 25 years and have 19 years remaining of that term.

He said they are on the old tariff and usually results in a cheque for about £2,000 per year.

With that income he said the new owners can expect to receive close to 40k over the next 19 years.

Is this correct?

I’ve been reading about tariff changes and the newer tariffs are much less lucrative. Can the old tariff really be locked in for the next 19 years?

Thanks

Merlin139

In a word yes.

Read info on FIT.

https://www.ofgem.gov.uk/environmental-programmes/fit/fit-tariff-rates

You will get a better response from posting this question on the Green & Ethical Section as all the PV experts hangout there.:D

https://forums.moneysavingexpert.com/forumdisplay.php?f=100

macman

Two things to ask: what is the installed capacity of the system? What is the FITs generation rate applicable per kWh? I'd be dubious abot the income figures quoted. A typical 4kWp system will produce around 3,400kWh pa. So it would need to be paying nearly 60p per kWh to bring in £2K pa.
Remember that you may need to replace the inverter after 10 years or so: budget £1K for that.

rags2riches_2

macman wrote: »

Two things to ask: what is the installed capacity of the system? What is the FITs generation rate applicable per kWh? I'd be dubious abot the income figures quoted. A typical 4kWp system will produce around 3,400kWh pa. So it would need to be paying nearly 60p per kWh to bring in £2K pa.
Remember that you may need to replace the inverter after 10 years or so: budget £1K for that.

Thanks for the reply. I’ve asked the owner those questions and will post back once I know the answers!

ProDave

Make SURE the vendor owns the panels and FIT contract and make SURE it is written into the contract that the vendoe reassigns the remainder of the FIT contract to you. The FIT "supplier" will have a set procedure to reassign the contract to a new owner, make sure that procedure is followed.

You get paid something like 50p per KWh generated on the original tariff rate, and that will still increase in line with inflation for the remainder of the contract.

BUT don't let this inflate the value of the house. General consensus it it might make the souse more attractive to some buyers, it generally does not make it worth more. Indeed the solar panels may acrually deter some buyers.

rags2riches_2

I’ve confirmed it’s 56.47p.

I believe he has increased his house price by around 20k to factor in the new owner will make up to 40k over the remaining 19 years.

Yes it’s a great perk but surely he can’t expect his house to sell for 20k over value and ceiling?

Frozen_up_north

rags2riches wrote: »

I’ve confirmed it’s 56.47p.

I believe he has increased his house price by around 20k to factor in the new owner will make up to 40k over the remaining 19 years.

Yes it’s a great perk but surely he can’t expect his house to sell for 20k over value and ceiling?

Solar panels only increase the value of a house in the mind of the seller... certainly not by £20K. In 19 years it will have zero value. If you are buying on a mortgage the lender might not be wearing rose tinted glasses and not value the property at £20K above the average for the area.

The biggest boost to value is off street parking and space to add an extension/summer house, etc, when compared to similar nearby properties. Given that a solar installation costs around a quarter of that price hike, and vendors typically ask 10% more than they expect to obtain, I would make a much lower offer.

You can check the sold prices, and estimated value, easily on the Zoopla phone app (and I guess on their web site).

If you do decide to make an offer, make sure that estimate of income isn't based on the last few exceptional weeks of sunshine. Also is there a transferable warranty? Does it cover a leaking roof, replacement panels? Is the tariff really transferable?

Call me cynical, but it's not the only property on the market...

Merlin139

The Fit payment would be 52.75p paid on everything generated and 3.72p paid on 50% of generation. This is increased each year inline with RPI.

If he has increased the cost of the house then I think he may find it harder to sell unless he gets buyers who are up to speed with the benefits of Solar PV.

If the FIT is transferred across to you then you will get the benefit of it plus whatever electricity generated that you can use during the day. Remember that the system produces around 75% between March and September.

If the system is 4kWp then he would have recovered the cost of installation and if he thinks its worth so much why is he moving? Why is he adding benefits of Tax Payers money to the Price?

You could say to him knock the 20K off the price of the building as you do not want the FIT. He can keep it. You will just use the free electricity. Point out to him that you will still have to allow the Generation metre to be read so that he will continue to get the FIT. Also he would still be liable for the cost of any upkeep to the system.

You will know what you are prepared to pay for the house and unless you are a cash buyer part of your mortgage will be covering the future revenue you would expect to get from FIT. It would also come down to what valuation any lender puts on the property.

Good luck in whatever you decide.

ProDave

I would NOT buy the house without the FIT contract being transferred. Anything else makes it a "rent a roof" scheme and look at the number of threads about people having trouble selling with those.

I would be firm and say you will pay market price for the house and want the FIT or you don't buy.

rags2riches_2

Frozen_up_north wrote: »

Solar panels only increase the value of a house in the mind of the seller... certainly not by £20K. In 19 years it will have zero value. If you are buying on a mortgage the lender might not be wearing rose tinted glasses and not value the property at £20K above the average for the area.

The biggest boost to value is off street parking and space to add an extension/summer house, etc, when compared to similar nearby properties. Given that a solar installation costs around a quarter of that price hike, and vendors typically ask 10% more than they expect to obtain, I would make a much lower offer.

You can check the sold prices, and estimated value, easily on the Zoopla phone app (and I guess on their web site).

If you do decide to make an offer, make sure that estimate of income isn't based on the last few exceptional weeks of sunshine. Also is there a transferable warranty? Does it cover a leaking roof, replacement panels? Is the tariff really transferable?

Call me cynical, but it's not the only property on the market...

He put it on the market for 399k then reduced it to 394k. I offered 365k which he refused and said he would expect 390k.

He had an offer from someone who couldn!!!8217;t obtain a mortgage for 393k and has already declined another offer for 375k.

I!!!8217;ve found an old add where it was listed with another estate agent for 379k but it is now with Purple Bricks who from what I understand are notorious for overspricing properties.

matelodave

In the end a property is only worth what someone will pay for it.

If it's overpriced then it will probably stay on the market for a very long time unless he finds a buyer who desperately want's it.

Our bungalow was well overpriced and sat on the market for nigh on three years until the vendor just could afford to wait any longer. It's asking price slowly dropped from £265k to £185k - we got it for £170k and probably still paid £10k over it's actual value