Top 4 Problems with Solar Leases
A solar lease is a long-term agreement to pay a monthly payment for the solar panels that a lease company installs on your roof. This is, in its most simple form, a swap from one utility company to another. A solar lease simply replaces the local utility company that generates electricity far away and brings it to your home with one that generates the electricity right on your roof. However, solar leases aren’t always the best option for homeowners. Below are four common problems associated with leasing solar energy.
Most Solar Lease Payments Escalate Each Year. And what was a low payment is slowly getting higher. If it increases at a rate of 2.99% a year, like many do, the monthly payment will double over the course of a 25-year solar lease, thus transforming a $150 monthly payment into an eventual $300 monthly payment at year 25. This is a perfect example of death by a million cuts. The increase may feel small at first but over time it becomes very expensive. There will come a time that a homeowner will grow tired of increases, seeking a better way to go solar.
No Equity Earned for Monthly Payments. The other reason solar leases don't add value is that making monthly payments does not impact the payoff amount or purchase amount of the solar panels.
Solar Leases Don’t Add Value When Selling the Home. Solar leases are not an asset owned by the homeowner, and therefore the home seller has no right or ability to pass on an increase in price due to the home having leased solar panels. A property appraiser will not or should not increase the value of the home that includes leased solar.
The Incoming Buyer Will Be Committed To Remaining Lease. If and when you want to sell your solar home, no matter how many years you have remaining on your lease, the incoming buyer will now be committed to the lease agreement. The list of challenges associated with buying and selling leased solar homes is long, and for this reason many real estate agents do not like leased solar. Generally, it complicates the sales of homes and results in buyers being unwilling or unable to buy. Nonetheless, agents do deal with it in a variety of ways including dropping the price of the home or hiding the fact it has a solar lease until a purchase agreement is signed. The best agents, however, are transparent about the lease and work hard to make the transfer possible.
The big question remains... Can I get out of this lease? The simple answer is yes. It requires some work and the ability to do what savvy homeowners have done in the first place: buy the solar system. Have more questions? We’ve got answers. Contact the experts at Spark to learn more about solar today.
