There has been greater financial incentive to install solar panels in recent years due to the introduction of feed-in tariffs (FITs). There are however, numerous legal considerations to bear in mind when fitting solar panels. Is it worth the effort?
The tariffs provide you with three financial benefits if produce electricity from renewable sources on a small-scale (irrespective of whether you are a business, individual, landlord, tenant, in commercial or residential property) namely:
- Your energy supplier will pay you a set rate for each kWh of electricity you generate. Once your system has been registered, the tariff levels are guaranteed for up to 20 years and are index-linked.
- You will get a further payment of 4.64p/kWh from your energy supplier for each unit you do not use and export to the electricity grid.
- You will of course have a reduced electricity bill since you will be producing electricity yourself and not have to buy so much from your supplier.
There are qualification criteria. FITs are only available for solar panels producing up to 5 MW of power (this is plenty for most businesses and consumers). The installation must be accredited and registered in the central FITs register. Furthermore, you must own the solar panels.
You should consider the following before embarking on your solar power adventure:
There are particular planning requirements as regards solar panels. For example, panels should not be installed above the highest part of the roof (excluding the chimney) and should project no more than 200mm from the roof slope or wall surface. If it is a listed building or in a conservation area, consent may be more difficult to obtain due to concerns over the panel’s visibility and their impact on the building.
Building regulation control promotes health and safety and regulates the types of materials and construction methods used to carry out works. A solar panel installation would normally require building regulations approval.
Consent of other parties
In a leasehold property there is likely to be a clause in the lease providing that tenants should obtain their landlord’s consent before making additions/alterations. Where the demise includes the roof/ structure (usually in the case of a lease of the whole) of a building the tenant will have the right to carry out the installation subject to landlord’s consent. By contrast, in a multi let building the landlord retains control of the structure and so could install panels without tenant consent. If there is a charge on the property the lender may also have to approve the installation of solar panels.
Restrictions on title
It should be checked that the property is not subject to restrictive covenants prohibiting you from making such installations. Where an issue arises you may have to obtain a deed of release from the covenant or an insurance policy protecting against claims resulting from breach of the covenant.
Right of light
It is essential that the property has a right of light, so that neighbouring premises cannot build erections stopping sunlight from reaching the property. Clearly solar panels are no good in the shade!
Maintenance, repair and insurance
In leases it needs to be made clear who is responsible for repairing, maintaining and insuring the solar panels. The lease should be drafted in such a way so the landlord and tenant know who has such obligations.
For leases it is important to determine who owns the solar panels and that this is documented appropriately. The panels need to be effectively defined, for example as forming part of (or being expressly excluded from) the property itself or the fixtures and fittings. In the case where a tenant has installed panels a landlord may desire for the panels to remain on the property when the lease comes to an end, but a tenant may wish to depart with them. Clarity of ownership is crucial in such a case.
Rent is often re-assessed in the term of a lease by a valuer making assumptions or disregards referred to in a rent review clause. A tenant should look to see if there is a clause assuming that no work has been done which increases the value of the property. In the absence of such a clause a tenant installing solar panels would effectively be paying for them twice.
Do I go green?
In summary solar panels can save you money in the long term and help you do your bit for the environment. However, depending on the property there may be legal obligations to overcome that could affect your decision as to whether they are a worthwhile investment or not.