Do solar panels increase house value?

by Holly Jackson a year ago 6 min read

Solar panels are an increasingly popular way of saving money on monthly energy bills, but how else do they offer homeowners value? Before you commit to installing solar panels, you may be wondering if they impact how much your home is worth.

Indeed, it is possible that solar panels may increase the value of your home – by around £1,800, according to some analysis. The fact they reduce the home’s energy costs and reliance on the grid can be appealing to buyers. Solar panels can be viewed as a home improvement, similar to replacing a bathroom or upgrading your electrics, which is likely to increase the property value. In this guide, we explore how and why solar panels can affect the price of your home.

Reasons solar panels may increase the value of your home

As residential solar has become more accessible for the general public, solar panels are increasingly seen as a desirable feature in homes. When looking for a new house, many prospective buyers are pleased to see solar panels installed. They may even be searching for properties with panels or be willing to pay more for homes powered by solar. The reasons solar panels may increase the value of your home include:

Solar panels improve a property’s energy performance

Solar panels will generally have a positive impact on the Energy Performance Certificate (EPC) of a property by improving its overall energy efficiency. This rating evaluates a home’s energy use, carbon emissions, insulation and other important factors; a higher EPC rating means a more efficient home. By generating clean, renewable energy, solar panels can help to improve a property's EPC rating. This is beneficial to the environment and results in lower electricity costs – all of which should appeal to people buying a home.

Solar power saves homeowners money

Because solar panels allow the homeowner to generate their very own power source – instead of buying it from the National Grid – they save households money. According to our own statistics, a standard 3.9 kWp system with 10 panels in the South East of England will save residents £828 a year (without a battery).

With this set-up, it would take around seven years to see a return on investment on solar panels. But if they’re already installed on a property you’re viewing, you don’t need to worry about the upfront installation costs. You’ll start saving – and potentially making – money straight away.

The cost savings will vary on a few factors, however:

Where the property is (sunlight hours vary by region and time of year)
How much electricity produced by the solar panels
How much electricity consumed by the household
What you get paid for excess electricity sold back to the grid, under the Smart Export Guarantee

Discover how much you could save each year with solar panels on your home

Solar panels offers greater energy independence

Instead of relying on the grid for all of their electricity needs, property owners with solar panels can generate some or all of their own electricity using the power of the sun. This can be especially beneficial for people who live in remote areas or in places with unreliable electricity grids. By generating their own power, they’re less affected by power outages or other disruptions.

Solar panels offer all property owners a way to gain greater control over their own energy supply and increase their energy independence. Being less reliant on the market also protects homeowners from price hikes, such as those we’ve seen in the last year, as well as any political instability from foreign sources of energy.

Having solar panels can generate money

The Smart Export Guarantee (SEG) is a scheme in the UK that requires energy suppliers to offer a tariff for small-scale, low-carbon electricity generation. If you have solar panels installed on your property or purchase a home with them, you’ll be able to generate money through the SEG by selling any excess electricity back to the grid.

The rate at which you can sell any excess electricity generated by your solar panels is determined by your energy supplier. The terms of the scheme may also vary between suppliers, but anyone selling a home with solar panels should be able to provide more information on the specific terms and conditions of their SEG tariff.

It is up to energy suppliers to decide what tariff to offer their customers. There’s no ‘minimum’; the only requirement is that it’s greater than zero at all times. In other words, they have to pay you for the electricity, but they can choose to offer multiple tariffs or just one. These could be fixed or variable. A fixed tariff will pay the same rate per kWh of electricity over the length of the contract, whereas a variable tariff will vary depending on market value.

Suppliers who offer SEG tariffs are published on Ofgem every year.

Solar panels appeal to eco-conscious buyers

Having solar panels on a property is better for the environment. They provide a clean and renewable source of energy, reducing a property's carbon footprint and reliance on fossil fuels, which are a major source of greenhouse gas emissions (26% of total emissions in the UK come from residential households).

The use of solar panels is also seen as a way for property owners to contribute to the fight against climate change and support the transition to a more sustainable energy future.

Properties with solar powers are compatible with electric cars

Not only can solar panels be used to power your home, but any electric vehicle (EV) too. And considering how popular EVs are becoming (the amount of EVs sold in a week in 2021 was higher than how many were sold in the whole of 2012), this is only going to appeal to more and more individuals. After all, EVs are more environmentally friendly when they’re powered by renewable energy as opposed to fossil fuels.

Could solar panels decrease the value of your home?

It's important to keep in mind that whether solar panels will increase the value of your home will vary depending on a number of factors, such as the size of the solar panel system, the age of the panels, and the local market for homes with solar panels. It's always a good idea to consult with a real estate professional to get a better idea of how solar panels may affect the value of your home.

The offering is more attractive if you own the solar panels. Solar panels may prove problematic if they were leased under certain conditions. The SEG tariff we’ve spoken about replaced a previous scheme, the Feed-in Tariff (FIT) scheme which closed to new applicants in March 2019. At its most popular and profitable, many companies would install solar panels for free – in exchange for leasing the roof space from the homeowner and receiving the payments for excess electricity. In these instances, it can be trickier to secure financing from mortgage providers as part of the property is leased by a company.

Other reasons which may deter buyers include misconceptions about the ongoing costs and efforts involved in maintenance, or worries over lifespan. Some people will simply not like the appearance of solar panels.

That said, it’s largely a matter of informing buyers of the realities of owning solar panels. They need minimal maintenance or cleaning (most of which can be done by homeowners themselves), and they will last typically more than 25 years.

Tips for selling a house with solar panels

Make sure your solar panels are in good condition. To ensure your panels are maintaining their efficiency, they should be kept in good condition. This doesn’t require much effort, but it’s advisable to let prospective buyers know how they’re looked after.
Check that your estate agent is familiar with the benefits of solar panels. Having an estate agent who understands solar energy – including the benefits it brings to a home and how to navigate the sale process – is beneficial.
Have all your paperwork ready. The installation details, any warranty information, and details on any SEG payments received are all important documents to have available should any questions be asked.
Share information on how solar power has impacted your energy bills. Providing a long-term view on how the panels have reduced your energy bills is one of the most persuasive ways to show buyers the value of solar panels.

Questions to ask when buying a house with solar panels

Are the solar panels owned outright by the property? As explored above, you need to know if the solar panels are being sold with the house under any lease conditions.
Are the solar panels securely fitted and effectively connected? Check that the panels were installed by accredited companies and that the system is registered correctly.
When does the warranty run out? Most solar panel systems will come with a warranty (Otovo offers five-year warranties, for instance), so ask if the installation is still under warranty and for the full details of the installer and any relevant insurance backed guarantees. Check what remains of the manufacturer’s warranty.
Does the house come with a solar battery? Batteries maximise the savings of any solar panel installation. For example, average annual savings in the South East of England with 10 solar panels is £828 without a battery, but increases to £1,219 with one. It’s worth asking about whether a battery comes with the property’s solar panel system.

FAQs

Can I take my solar panels with me?

If you own the solar panels on your house, you can take them with you. You would need to consider that having panels removed and reinstalled can be a difficult and expensive undertaking, however. You will also need to leave the roof of the house you’re removing them from in good condition and be transparent that the solar panels are not being sold with the property.

Can I transfer my payments?

If you are selling a home with solar panels (that are owned outright), you will need to transfer the payments you receive from selling any excess energy to the grid. Any payments should go to the new owner once exchange and completion of the property has taken place.