Free solar schemes: talk to your mortgage lender before you sign
Posted by Cathy Debenham on 21 September 2011 at 9:12 am
Rumours abound about banks, and whether or not they will let people who hold mortgages with them participate in 'free' or 'rent a roof' solar panels schemes, so I thought I'd investigate.
The good news is that most banks will agree to these schemes, subject to certain conditions. Most of the onus is on the installer to prove to your lender that the lease meets the guidelines drawn up by the Council of Mortgage Lenders (CML) and Building Society Association.
However, all the banks and building societies I talked to said it is important that the mortgage holder should contact their lender too (the CML guidance only applies to properties in England and Wales - but I suggest people in Scotland and Northern Ireland contact their lender too).
The guidelines state that the installer must provide:
- signed confirmation to your lender that it meets that lender's minimum requirements
- evidence that panels will be installed to a suitable standard (showing MCS accreditation covers this requirement).
The CML provides a template letter for installers to use when seeking consent. This covers:
- confirmation that the borrower has been advised that the lease is a long-term, legally binding agreement, and they have been recommended to seek professional advice from a suitably qualified conveyancer about its implications
- proper inspection of the property
- maintenance (and charging of any maintenance fees) access
- responsibility for legal consents such as planning permission etc
- responsibility for consent from landlord if property is leasehold
- other requirements of lease, such as keeping trees pruned
- liability for repair of any damage caused
- length of lease
- allowance for removal of panels for essential repairs and improvements (and charges made)
- ability to break the lease if property is repossessed.
This letter lays out the minimum standards and individual lenders may impose more (and some do).
Where a lender already has an agreement in place with an installer company, the process may be quicker and easier. A Shade Greener and Homesun are the two companies whose names came up most regularly as having negotiated agreements with various banks and building societies.
Barclays says: 'Consent can only be granted by Barclays to the solar panel providers that have entered into a deed of agreement with Barclays. The deed gives the bank the right, as mortgagee in possession, to require that the solar panel provider surrenders the lease and removes the panels (making good any damage caused). Once in place, the deed of agreement between the solar panel leasing company and Barclays applies for ALL new requests for consent from that particular company.'
Lloyds says: 'There are a number of things that we need to be in place for us to agree to the arrangement, including the mortgage account being up to date and the lease is in a form approved by us. It's not acceptable for leasehold flats.
'If the property is a house held on a long lease, confirmation is required from the customers solicitor that where the lease contains restrictions on sub-letting or carrying out alterations, the landlords formal consent has been obtained. The solicitor must be on our approved panel.'
As an interesting aside, I learnt that the solar panel installer isn't actually renting the roof, but the airspace above the roof.
Photo by woodleywonderworks
If you have a question about anything in the above blog, please ask it in the comments section below.
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