Why are Mortgage lenders Concerned?
There has been a lot in the news over the last couple of months regarding the dangers of Free solar panels and the negative effect they can have on the value of your property.
The dangers were highlighted by the case of the couple who, had free solar panels installed on their roof under a FIT Scheme with the consent of their mortgage lender and having been reassured by their mortgage broker that this would not adversely affect the value of their property. When they decided to re-mortgage they found that they could not get a mortgage due to the free solar panels.
As soon as the prospective mortgage lender found out that there the property was subject to a FIT Scheme involving free solar panels - they pulled out - leaving the couple with wasted booking fees. This happened with several mortgage lenders and when they tried to sell the house - the buyers could not get a mortgage lender to consider the property either. Eventually, their current mortgage lender offered them alternative mortgage on the basis that it had approved the installation of the panels under the FIT Scheme. The couple’s mortgage broker has not been able to find them a better deal due to the fact that the property is subject to a FIT Scheme involving free solar panels. Householders with free solar panels under a FIT Scheme are therefore stuck and cannot re-mortgage to a lower rate or move should they need to relocate.
What can be done to Reassure Mortgage lenders?
The number of properties in the UK which are subject to free solar panels under a FIT Scheme now estimated to be in the region of 300,000, the issue of free solar panels needed to be addressed urgently. The Council of Mortgage lenders (‘CML’) has now published guidelines.
When considering the installation of Free solar panels under a FIT Scheme, the following needs to be addressed:
- Installers must obtain all necessary consents – including that of the mortgage lender - before installing the solar panels.
- The installer must be accredited - MCS certified
- The installation of the solar panels must be to the accredited standard
- The cost of the maintenance and repair of the panels must not exceed £60.00 per year.
- There must be a provision in the Lease that the lender can have the solar panels removed and the FIT Lease bought to an end at no cost to the lender.
- There are no other onerous conditions that affect the value and marketability of the property.
It should be borne in mind – that these are only guidelines and may not be accepted by all lenders - indeed, there are lenders that have their own criteria and those that will only make decisions on a case by case basis. The risk still remains that even if the householders current mortgage lender agrees to the FIT lease there is no guarantee that all other lenders will. This may still reduce the market for re-mortgaging and potential buyers in respect of the property.
At iConvey, we are specialists in conveyancing and Property Law and can advise you on the legal issues involved in Feed In Tariff Leases and free solar panel schemes. We ensure that you are always aware of the costs at the outset with a transparent fee structure and no hidden fees. To discuss your needs or to obtain a quote for your conveyancing visit our website: http://www.iConvey.co.uk