Rent-A-Roof Schemes Could Affect Mortgage Prospects, Says Solar Company Solar Panels Direct

Online, April 9, 2012 (Newswire.com) - Thousands of homeowners signed up to rent their roofs to solar companies, receiving free electricity while the installers claimed the Feed-In Tariff payments. Despite many mortgage providers agreeing to the properties being part of the scheme, it now appears they may be getting cold feet and are refusing mortgage applications on the basis that the properties may be unsaleable in the future.

Guidance was produced in 2011 by the Council of Mortgage Lenders in an attempt to properly manage the whole process of fitting solar panels within rent-a-roof schemes to mortgaged properties, with both panel providers and mortgage companies involved in the process. However, it may be the case that some mortgage departments do not realise the guide exists to help them navigate the minefield and are issuing 'blanket bans' on getting involved.

A spokesperson for Solar Panels Company, Solar Panels Direct, said: "It appears that the problems some homeowners are experiencing are due to three problems. First, some solar panel firms didn't bother to seek agreement with the current mortgage provider, which is a major no-no. Because it is early days, it has yet to be proved conclusively that solar panels make a property as saleable or more so than it did before they were fitted. Mortgages are provided on the basis of a valuation, and anything attached to the property that could negatively affect that valuation will not be considered viable to the mortgage provider. The mortgage providers must be consulted when rent-a-roof schemes are being considered by a homeowner.

"Second, something that is attached to a mortgaged property and carries a loan in this way could be considered a charge on the property. If the mortgage provider had to repossess the house in the future it could seriously affect the price it receives, not to mention it would have to take over the loan until new owners could be found who are willing to do so. The solar panel company will only take off the panels if the mortgage lender cannot sell the property. That is clearly worrying some lenders.

"Third, from the cases reported in the media, it seems likely that while one mortgage lender may agree to let the panels be put up as part of the scheme, it doesn't necessarily mean that other lenders have to. This means homeowners may be stuck with one mortgage lender for the duration of their mortgage and unable to switch to a more competitive rate. That could be a situation open to abuse if lenders start jacking up the interest rates of their mortgage products for existing customers that end up stuck."

Two mortgage providers that are embroiled in cases where homeowners have been turned down for mortgages due to being members of a rent-a-roof scheme include Skipton and Nationwide. On 20 February Skipton issued guidelines to its brokers stating: "The society will NOT lend where the panel provider is supplying and fitting panels free of charge, is taking income from the grid tariff scheme and is creating a long-term lease against the roof and roof air space."

However, when asked a spokesperson insisted Skipton accepts applications on properties where a rent-a-roof scheme is in operation. Likewise while Nationwide has demonstrated it will give its consent to homeowners who wish to take part in the scheme, but will not accept mortgage applications from any scheme members outside of Nationwide.

Sue Anderson of the Council of Mortgage Lenders said: "I am not aware that there has been any wholesale policy change from lenders - it has always been a commercial decision for lenders, and they take different views. But I certainly haven't heard of any universal move not to allow remortgage business for properties with leased solar panels."