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Are you buying a new home?
Over 65% of Americans are homeowners. As you join their ranks, consider what buying a specific house entails. In some cases, you might find some ongoing costs inflating the property price.
The most common consideration is buying a house with leased solar panels. It seems attractive since you are tapping into renewable energy. However, accessing solar power is only a facet of the entire picture.
Read on as we discuss some pros and cons of having a solar panel lease for your home. It ensures you will have an informed decision before committing.
How Does a Solar Lease Work?
A home with leased solar panels can use all the power they generate. Instead of drawing power from the grid, your home uses solar energy. If you have enough solar panels, you can eliminate your monthly bills.
However, despite this benefit, you will pay your solar panel lease. It is usually lower than your expected utility bills. For example, a $150 electric bill with a $100 lease payment means you are still saving $50 per month.
Solar leases have varying contract terms, but some basic ones are often similar. Usually, a solar lease will last between 20 and 30 years. This duration often covers the average lifespan of the panel system.
The solar developer will often offer a monitoring application for your smartphone. It enables you to learn more about your solar system performance. They will also track your system to ensure it is working as it should.
When issues affect your panel system’s performance, the company is responsible for the repairs. Most contracts often perform the fixes at no additional fees.
The lease will also have a price escalator. It reflects the increase in electricity costs in your area. With this, expect your payments to go up by 1% to 5% every year.
What Are the Advantages of a Solar Lease?
Now you know what solar leases are, your next step is to learn what they can do for you. Here are some benefits of a solar lease:
No Upfront Costs
The best part of buying a home with a lease is the lack of high upfront costs. You need not pay exorbitant amounts to enjoy the benefits of solar power. In most cases, solar leasing requires no down payment.
When it is time to move to the house, the previous owner will transfer the lease to you. However, you have the flexibility of breaking the contract and removing leased solar panels.
No Maintenance Responsibilities
As mentioned above, you are never responsible for maintaining the solar panel system. It sounds great on paper, but it is not the primary benefit of leasing. After all, solar panels are low-maintenance.
Generally, you need only use a hose to rinse off the dust and debris from your panels. However, your warranty will cover issues like faulty wiring or inverter problems. As for storm-caused damages, your homeowner insurance will help fix them.
The bottom line is these protections also apply when buying the solar panel system.
Consistent Monthly Payments
Your solar lease contract will outline the monthly payment amount. It means you need not worry about uncertainties since the price escalator is easy to calculate. It is easier for you to budget your expenses, even when emergencies arise.
What Are the Disadvantages of Solar Lease?
When it is time to move to a home with a solar lease, be aware of these disadvantages. It allows you to decide whether to keep or break the contract. If you are selling your home, click here for more information about Chicago home buyers.
No Tax Credits and Other Solar Incentives
A solar lease is not eligible for a solar tax credit since you are not the owner. It means the federal solar tax credit goes to the developer. Worse, any state credits will also go to them.
You cannot enjoy other rebates and incentives like SRECs. It means you will end up missing out on a lot of extra money in the long run.
Lower Savings in the Long Run
The primary disadvantage of leasing is the lower long-term savings. When buying solar panels, you can get rid of your entire electric bills. You need not pay any other fees every month.
Even taking a loan to buy solar panels is better. After paying it off, the panels are yours forever. It means you will make electricity for free.
Meanwhile, a lease will lock you into paying for over two decades. The amount spent on lease payments could exceed the upfront costs of buying a solar power system.
Worse, the electricity from the panels is never free. It applies even when the price is lower than the national average.
No Additional Property Value
When you buy solar panels, your home value increases when you move out. It is also more attractive since buyers will see a fully-paid solar panel system as a huge plus.
Meanwhile, leases do not add more property value since it is not your solar system. Most buyers will never take over a lease agreement based on your current energy demands. It is also a confusing concept, making them less likely to buy your home.
Tips When Buying a House With Leased Solar Panels
Now you know the pros and cons, consider finding more information about the lease terms. Ensure you understand the contract to determine whether it is worth your time.
Ask about the monthly fees and find out if it has escalating prices. The solar company can transfer the lease to your name if you feel satisfied with the lease terms. Regardless, ensure your financial situation can handle the lease.
Learn More About Solar Power Now
These are some considerations when buying a house with leased solar panels. It is a costly investment, so never commit without learning about the pros and cons.
Did you find this guide helpful? If so, read our other posts and learn more valuable tips and tricks today.
