Do Solar Panels Increase Home Values?

Topic: new solar projects Read Time: 8 mins
Landowner type:
Independent landowners | Institutional landowners | Professional advisers
Energy: Solar
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Have you been trying to figure out whether solar panels increase home values? If you plan to put a solar project on your land, stick with us to determine how this might affect your land values.

Whether you’re a homeowner, a rural farmer, or a commercial property developer, you might be interested to know whether solar panels increase property values. And that’s precisely what we’re going to cover. 

In this detailed rundown, we’ll give you all the information you’ll need to figure out whether solar panels increase home values. We’ll cover energy efficiency, possible savings on bills, whether solar properties are less marketable, and everything in between. 

It doesn’t matter whether you’re after unbiased advice or words of wisdom on purchasing a property – we’ve got you covered.

Just before we get started, it’s worth mentioning that we’ll be attacking this article from two different angles; residential and commercial. If you’re a homeowner, we recommend continuing right here. For landowners, click here.

Now, let’s dive in.

Photo showing Energy Performance Certificate score

If you’re trying to figure out whether solar panels increase home values, energy efficiency should be one of your primary considerations. Solar panels can significantly improve a property’s overall Energy Performance Certificate score, making it more desirable to potential buyers. Plus, you can’t beat the lower energy bills that come around with a higher EPC rating.

Believe it or not, having solar panels in your home can boost its energy efficiency by up to TWO LEVELS (or 15 points if you’d prefer to look at it that way). This is more desirable than you might think. 

Although not all buyers will initially see the value of solar panels, the government is pushing for all buildings to be rated “B” on the EPC scale by 2030. For this reason, solar panels could increase your home’s value by 0.9% to 2%. If we consider another study, Admiral Money states that solar panels can boost home values by as much as 25%. So, there’s certainly a lot to love about them.

If you’ve boosted your home’s energy efficiency using solar panels, you’re also likely to save a decent amount on your energy bills.

On the average three-bedroom house, you can expect to save around £362 per year from having solar panels. You’ll also make approximately £158 from the Smart Export Guarantee. Overall, that sees you saving a whopping £520 on your energy bills every year. Now, that’s something to shout about.

If you buy a home with solar panels attached, you’ll also be able to avoid the upfront installation costs. This process usually costs around £7000 on average. So, you’ll benefit from reduced energy costs and won’t need to worry about fronting the cost.

Close-up of British pound paper bills

Solar-equipped homes can also sell for more depending on the buyer you’re targeting. That’s mainly because solar panels are considered upgrades to a house (much like extensions, conservatories, or other home improvements). Your mileage may vary, but most buyers can appreciate the cost savings from a row of solar panels.

Following on from what we just mentioned, the right renters are willing to pay up to 13% for a low-carbon, energy-efficient property. This is especially true when we consider the ongoing energy crisis due to the Ukraine war. 

With average rents in London hitting a whopping £2480 as of the fourth quarter of 2022, any significant energy savings are a huge benefit. For landlords, a 13% increase in this figure would bring their overall rental income to an impressive £2802.40. So, this potential extra income is certainly nothing to sniff at.

Aside from renters, buyers are also happy to pay around 20% more for homes with better energy efficiency than competing properties. With solar panels taking many properties to a B rating and above, it’s a worthy investment. As net-zero limits are looming, this figure is only set to rise.

While solar panels appeal to many people, they’re not for everyone. From our research, there is quite a significant generational gap for solar panel approval. While 74% of Millennials and Gen Z said they were likely to rent a property with solar panels, just 65% of Boomers were willing to. While this isn’t a massive difference, it does show that the younger generations are more open to energy-saving home improvements. However, it’s worth mentioning that 69% of total National Home Energy Survey respondents stated that they’d buy a house with solar panels. This is up 65% from the previous year, so opinions are slowly shifting.

When it comes to non-residential properties, most landowners want to make additional income from their land. After all, there’s no point in leaving it sitting pretty if you’re not using it. As a result, many rural developers have invested in large-scale commercial solar farms.

Rows of solar panels at a farm

While a few people might complain about solar farms being an eyesore, land values in these rural areas tend to be lower. So, there’s generally less aggravation about excess land being used for solar or wind projects. For this reason, many landowners will benefit from getting solar panels on their land. And as the projects generate impressive income (and offer an ROI of around 10-20%), they’re worth considering.

For developer-built projects, the value increase largely depends on the lease in place. And for self-build landowners who are fronting the financing, the value largely relies on the Power Purchase Agreement that’s in place with their energy off-taker.

However, regardless of the deal, solar farms are a high-income-generating asset for rural communities. The only significant differences in property values were seen on homes near sites previously used for agriculture (seeing an average 3% decrease). In short, they’re a net positive!

One of the main questions from landowners relates to how intrusive or impactful they’d be. While we’re not saying solar farms would be completely separate from your day-to-day operations, they have less impact than you’d think. And that relates to both operational implications and the effect on property values.

This is confirmed by property appraiser Richard Kirkland, who claims that many factors go into the impact of a solar project:

picture of yellow quotation marks

Among the many problems with drawing conclusions from such a small difference is that there are many factors at play, including the desirability of the house and the features of the land. The presence of a solar project is one of those factors, and it’s difficult to say how much weight it has.

However, he goes on to say that solar projects don’t tend to lead to a pattern of negative effects on surrounding property prices. So, if you’re wondering whether solar panels increase home values (or decrease them), the impact can be negligible.

We couldn’t write an article on whether solar panels increase home values without mentioning their physical appearance.  Many residents near potential solar projects worry they will devalue the entire area because they’re so large. Although this is only sometimes the case, large-scale solar farms (or rows of panels on homes) may reduce the amount a buyer will pay for a property. 

We’ll say that this is mainly applicable to the Not in My Backyard (NIMBY) crew, but even regular residents worry about property values diving.  Many people are also generally annoyed about the increased presence of solar farms in their local area. For example, there’s been an outcry about Red Barn Solar Farm in Wiltshire. 

The Gazette and Herald state that:

picture of yellow quotation marks

The proposals have been met with anger by some residents who are concerned the development will be an “eyesore” that blights the village.

The residents oppose the panels for different reasons, but many feel that the look of the panels makes the village less attractive. While this is impossible to prove in an absolute sense, it’s certainly worth thinking about. Plus, there’s nothing more worrying for local residents than uncertainty about property prices.

A technician performing maintenance work on a solar panel

While solar panels are generally low-maintenance, there is a chance that you’ll need to pay for upkeep during their lifespan.

An average solar panel service costs between £100-£200, but this doesn’t necessarily need to be done yearly. In our book, the maintenance costs certainly don’t decrease property values. However, you’ll need to work the cost of upkeep into the final selling price of your property.  After all, it adds up.

Aerial view of a solar farm, showing how much space is needed

The final thing we’ll think about in this rundown of whether solar panels increase home values is SPACE. While roof-mounted solar panels take up minimal space, entire solar farms take up a lot of acreage.

The average space required for a solar farm is usually a minimum of 25 acres of land for every 5 megawatts of installation capacity. Smaller projects require a touch less, with 10 acres being average. However, solar farm land requirements can be strict, so you’ll need a lot of spare land to play with.

Solar panels boost a property’s value by as much as 25%. But estate agents have also said that solar panels can put off certain buyers. Whether this is fair is tricky to say, but some buyers don’t appreciate the look of solar panels. However, it’s worth mentioning that with new environmental legislation, property owners will be forced to go green. For many people, low EPC ratings are an immediate red flag. And as we mentioned, solar panels will boost EPC ratings.

While there can be slight property value decreases, studies rarely consider solar development’s financial incentives. For property owners, this could mean lower utility bills or payments from the solar farm developer; for communities, residents could benefit from reduced taxes. So, it’s down to you to decide whether solar farms increase home values – as realistically, it’s not ALL about money.

Homes with solar panels on them can sell for more than those without them, as buyers love an eco-friendly purchase. Plus, you can’t deny that they help buyers to save on energy bills.

It’s generally a good idea to clean solar panels once a year. This isn’t a hard and fast rule, but many panels get debris buildup during the winter. So, it would help if you cleared this before spring rolls in.

As a rule, you shouldn’t hear noise from your solar panels during the day or night. They’re generally quiet.

If you’d like to learn more about putting a solar project on your land, contact the team. We’ll be happy to run you through options for mounting solar projects on your property and will run through just how much you could stand to make.

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