As the UK housing market becomes increasingly energy-efficient and green in its outlook, solar panels have been increasing in popularity as a smart solution to save on your energy bills.

But when it comes to mortgages, solar panels and mortgage lenders don’t always see eye-to-eye.

While many homeowners assume that installing solar panels will automatically make a property more valuable, the reality is more complicated. Lenders can be cautious and hesitate to approve loans on properties with solar panel features – especially if they’re leased rather than owned.

In this article, we shine some rays of insight on why some lenders are wary of solar panels, how solar panels might affect your mortgage, and the best steps you can take to ensure your mortgage application succeeds. Let’s begin.

Understanding Solar Panels and Mortgage Approval

Ownership is key when understanding how solar panels can affect your mortgage. If your property includes solar panels, and you own the panels outright, then lenders will typically have no area of concern. However, leased panels or Power Purchase Agreements (PPAs) are likely to cause issues.

When solar panels first hit the market as the new and latest upgrade for the house, rent-a-roof schemes became a popular way of installing them without the high upfront costs. This helped homeowners save on their energy bills, boost their properties energy-efficiency rating, and often benefit from the – now expired – Feed-in-Tariff (FiT) government programme.

In return, however, homeowners would agree to lease their roof for a set period of time (usually 20-25 years).  While this arrangement worked well for reducing costs, it also meant the solar company held legal rights over the roof, which could limit a lender’s ability to repossess or sell the property if the homeowner defaulted on their mortgage.

What does all this mean for you?

If your property has solar panels and you own the panels outright, then lenders will generally see this as low if not unchanged risk. As such, the feature of solar panels will not likely affect your mortgage or remortgage process.

However, if your panels are leased or tied to a long-term roof lease agreement, lenders may view this as a potential legal complication. As a result, lenders will want to ensure the following:

• The lease meets Council of Mortgage Lenders (CML) guidelines.
• The solar company’s rights don’t restrict repossession or sale.
• There are no clauses that could reduce the property’s value or marketability.
• The remaining lease length aligns with the mortgage term.
• The buyer or future lender can easily take over the agreement.

If these conditions are not met, you could face delays in your mortgage application, have a reduced lender choice, or even rejection – unless the lease is amended or bought out.

In short, knowing the type of solar panel ownership you have is essential before applying for a mortgage.

If you’re buying a house with leased solar panels or wondering how these agreements affect your chances at securing a mortgage – it’s crucial that you know which lenders to use.

At Boon Brokers, we can help you simplify the complexities when it comes to securing a mortgage that matches your needs. With whole-of-market access, our dedicated advisers can search across a wide range of lenders to find those best suited to properties with solar panels.

Can Solar Panels Prevent Me From Getting a Mortgage?

Yes, installed solar panels can affect your mortgage application but it will largely depend on the ownership status and your chosen lender’s criteria.

As we noted above, if the panels are owned outright, most mortgage lenders treat the property the same as one without solar panels. However, leased solar panels or those installed under a roof lease agreement are likely to be assessed by lenders as higher risk.

This is because leased solar panel arrangements can restrict a lender’s ability to repossess or sell the property, add legal complexities, and delay the sales process.

To resolve this, homeowners or buyers can sometimes purchase the lease rights from the solar company directly. This would mean paying an agreed sum to take full ownership of the panels and remove the lease agreement. While this option does require an upfront cost, it could remove lender objections and simplify both mortgage applications and property sales in the future.

If you’re actively searching or are trying to buy a house with leased solar panels, it’s important to keep in mind that lenders may impose extra checks and conditions before approving your mortgage.

To better understand your options and requirements set out by lenders, talk to a trusted mortgage brokerage. Here at Boon Brokers, we provide fee-free expert mortgage advice with whole-of-market access. We can help guide you through any scenario, helping you find the lender and mortgage that matches your needs.

What Is a Rent-a-Roof Agreement and Why Do Lenders Care?

A rent-a-roof agreement is a lease contract agreement that is often related to solar panel installation. In this agreement, the homeowner rents their roof space – typically to a solar company – and in return, they will receive rent or a share of energy savings.

As we highlighted in the above section Understanding Solar Panels and Mortgage Approval, a rent-a-roof scheme can complicate mortgage applications by increasing the perceived risk for lenders.

Ultimately, lenders will need to assess whether the agreement will restrict property rights or create ongoing costs. If a rent-a-roof agreement includes terms that are unfavourable to a lender, for example, restricting their ability to repossess or sell the property if mortgage payments are missed, most lenders will refuse to approve the mortgage.

What Can Homeowners Do to Sell or Remortgage with Solar Panels?

Whether you’re selling a house with solar panels or looking to remortgage with a property that has solar panels, the most important step is preparation. Understanding how your solar setup will affect the property value, buyer interest, and lender requirements can make all the difference in securing a smooth sale or a mortgage approval.

Here are four key preparation steps you should know:

• Check Your Ownership Status

Confirm whether the solar panels are owned outright, leased, or financed. Buyers and lenders often have different requirements depending on the arrangement, so knowing this upfront can prevent delays.

• Get the Lease Checked

If the panels are leased, ask a solicitor to review the contract and ensure it meets mortgage lender criteria. This step is crucial to avoid both sales falling through or remortgage applications being declined.

• Consider Buying Out the Lease

In the case that you’re currently in a rent-a-roof scheme, purchasing the panels outright can remove lender objections. This can make your property more attractive to buyers and will improve approval chances when remortgaging.

• Prepare All Documents

Gather MCS certificates, warranties, and lease agreements in advance. Providing this paperwork quickly can speed up both sales and remortgage processes.

How Can a Mortgage Broker Help With Solar Panel Mortgage Problems?

If you’re facing problems with solar panels during your mortgage application, working with a trusted mortgage broker will make all the difference.

At Boon Brokers, our dedicated mortgage advisers understand the complexities that come with solar panel properties and know exactly which mortgage lenders accept solar panels and can advise on the best lenders for your situation.

With access to whole-of-market lenders and specialist knowledge of green mortgages, Boon Brokers is well placed to help you secure the best possible deal – whether you’re buying, selling, or remortgaging.

Contact Boon Brokers today to receive expert mortgage advice that is tailored to your needs – completely fee-free.