Solar panels - not to be taken lightly!
During the current economic climate and rising home heating and electricity costs, homeowners in Northern Ireland may seek to explore alternative energy sources to help their house function.
There has been a dramatic increase in the usage of Renewable Energy over recent years and, in particular, growth in solar PV installations throughout Northern Ireland.
However, despite their increasing popularity, there are some important legal matters to be addressed for homeowners considering the installation of solar panels on their property. These same considerations will also apply to prospective purchasers who may be in the process of acquiring a property which already has the benefit of solar panels installed. In this scenario, further complexities may arise if a purchaser is financing their acquisition subject to a mortgage.
This article seeks to highlight the key legal considerations related to solar panel installation on homes throughout Northern Ireland and how complexities may be addressed.
Whilst not always necessary, an applicant may have to obtain planning permission to install solar electric panels on their property. One would expect planning permission to be required if, for example, the property is situated in a conservation area or the panels are being installed on a listed building.
If it transpires during due diligence that solar panels were installed without the necessary planning approvals, it is possible to obtain retrospective permission, although these applications can be fraught with difficulties and are often very expensive and can add unnecessary time to a transaction, possibly impacting any chain of buyers/ sellers.
Any concerns regarding eligibility, or general solar panel planning queries, should be addressed with the local divisional planning office.
Building Control consents
It is important to confirm that all solar panel installations have passed the standard building regulation guidelines and that the usual statutory consents, to include building control approval and accompanying completion certificate, have been issued by the local council building control department.
For the regulatory consent to be distributed, the building control’s inspecting officer will need to verify that the roof of the structure is able to support the additional weight of the rooftop solar panels, and they will also need to check the electricals of the system to ensure they are safe.
If you are a prospective purchaser and solar panels have been installed on your target property without the statutory consents referred to above then, like planning permission approval, it is possible to obtain a building control regularisation certificate. A regularisation certificate is, in effect, retrospective approval. However, in the absence of the required building control statutory consents, a prospective purchaser would be advised to carefully consider if they are willing to proceed with their acquisition. In addition, a lender may refuse to lend monies until this certificate has been obtained.
A large volume of acquisitions throughout Northern Ireland will be financed with support from a lender. The UK Finance lenders’ handbook provides guidance for conveyancers and whilst obligations will differ depending on the lender, it is important for conveyancers to be acquainted with a lender’s general mortgage conditions, particularly where the security property avails of solar panels.
The jurisdiction of Northern Ireland differs from England and Wales in that a ‘lease of roof space’ is not acceptable to lenders in Northern Ireland, and a ‘lease of rights’ will be required. So, what is the distinction between these two concepts?
Lease of Roof Space
Solar panels will be installed by a solar panel provider. Normally, the provider will own and maintain the solar panels under a rooftop lease, otherwise known as a ‘Lease of Roof Space’. A ‘Lease of Roof Space’ will comprise essential details such as who will be responsible for the maintenance of the panels, repairs and other commercial aspects.
However, a ‘Lease of Roof Space’ must evidence that there is an ability to contract out of the security of tenure provisions accounted for under the lease. Unlike England and Wales, it is not lawful to ‘contract out’ of business tenancies in Northern Ireland as governed by the Business Tenancies (Northern Ireland) Order 1996.
Therefore, for properties seeking to benefit from solar panels in Northern Ireland, a ‘Lease of Rights’ must be entered into.
Lease of rights
A ‘Lease of Rights’ is similar to a Licence and will grant solar panel providers permission to install, maintain and operate the solar panels installed at a property. However, one must be careful when drafting such an agreement so that exclusive possession is not granted over the property or any part of it.
For prospective purchasers acquiring a property with solar panels installed and buying subject to a mortgage, it is important to ensure that the lender’s consent is endorsed to any such ‘Lease of Rights’. A borrower must be aware of their lender’s mortgage conditions to ensure they are not in violation of same by entering into such an agreement with a solar panel provider.
There is no doubt that due to the economic and environmental benefits, renewable energy is attractive to many homeowners. However, consideration should be given to the factors addressed in this article to ensure individuals make an informed decision before committing with such an initiative.
If you would like any further information or advice, please contact Neil McCracken from the Real Estate team.
*This information is for guidance purposes only and does not constitute, nor should be regarded, as a substitute for taking legal advice that is tailored to your circumstances.