22 Sep Home Buyers Shying Away From Rooftop Solar Leases
In an age where green living is a highly valued aspect in many homes, an interesting trend has begun to take place that has had home buyers balking at considering the purchase of homes with solar panel-powered energy systems. In order to avoid paying for these energy-efficient systems in one large, lump sum, many home owners in the sunnier climates of the country have opted for leasing solar panels for their homes instead of buying them. While the presence of these systems can add great value to a home in addition to reducing monthly energy costs, many home buyers have expressed apprehension at taking on an uncustomary financial arrangement.
Leasing solar panel systems has seen a very recent boom thanks to the shift toward environmentally responsible home design. The leasing arrangement allows for a more affordable option as many solar panel systems can cost thousands of dollars. As a result, there has been a 38 percent hike in U.S. residential installations in the last year, as more and more home owners are jumping on the green bandwagon.
While the benefits of having a solar powered energy system for the home reap many benefits for the environment, home owners who turn around to sell their homes after taking on leased systems are having problems translating the lease into real value for their homes.
Leased Solar Systems Cause Trouble For Home Sellers
While it is certain that owning a solar powered system adds much value to a home, leasing a system puts that value into question for home owners. According to a December 2013 study by the the Lawrence Berkeley National Laboratory, the average rooftop solar power system adds about $25,000 upon installation. In cases where the system is owned outright by the home owner, that value can be added right into the asking price of a home when it comes time to sell. In cases where the system is leased, however, a grey-area of ownership comes into question and value can actually be deducted from a home.
According to the Residential Green Valuation Tool, which is a guide offered by the Appraisal Institute trade group, leased systems are actually considered personal property rather than a part of the home itself. When the home is sold, the buyer has to agree to take on that lease, which can turn into a contentious bargaining factor as the lease is considered a liability rather than an asset to the home.
“Some buyers just won’t be on board” with assuming a solar lease, said Nick Culver, a solar analyst at Bloomberg New Energy Finance in New York. “Even if you save money every month, you limit yourself to a certain subset of buyers.”
The lease certainly became a liability for home owner Dorian Bishopp, who ended up taking 10 percent off of the initial asking price of his home over the course of three reductions to attract an eventual buyer. Said Bishopp to Bloomberg News, “It’s a deterrent, definitely.”
While home owners with a solar panel lease on their hands continue to fight the drawbacks, others hope that the solar lease will become less scary as they become a bigger part of homes in the years to come.