Should you put solar panels on your investment property? by Kelseigh Wrigley

Installing solar panels is a huge financial commitment, but one that can be rewarding long term thanks to solar feed-in tariffs and being less reliant on grid electricity. Unfortunately, these benefits can usually only be passed onto the resident of the property who uses the electricity. So how then, can investors make a return on their solar panels if they don’t live at their property? And, is it even worth installing solar on a rental property?
Should you put solar panels on your investment property?    by Kelseigh Wrigley
In this guide, Canstar Blue takes a look at some of the advantages involved with installing solar panels on an investment property. 

From the arrangements with tenants, maintenance required and whether or not there are rebates available to landlords, we uncover whether it’ll provide any real value.
Can you put solar panels on a rental property? 

There are no rules currently to say you cannot install solar panels on a rental property. However, your ability to do so will vary depending on whether you are the tenant or the owner of the rental property. If you are renting a property, you may be limited in your access to rooftop solar panel installations, depending on the relationship and tenancy agreement you have with your landlord. 

If you own the rental property however, there is nothing preventing you from adding solar panels to your investment. Whether or not you deem it to be a good financial decision though, will be based entirely on your individual circumstances. That’s why it’s best to conduct some research into the potential benefits of solar before diving straight in. 

What are the benefits of putting solar panels on my investment property? 

While it may seem as though the benefits of solar panels can only be reaped if you reside at the property, there are still some advantages. Some of these include: 

Increase in property value: If you eventually decide to sell your investment property, you may find its value will increase due to the addition of solar panels. This however, may also depend on the area you are selling in and the buyers who may be interested. 

Property more appealing to renters: Installing solar panels may help to make the dwelling more attractive to renters as they’ll be able to benefit from solar energy during their tenancy. Some renters may even be willing to pay slightly more rent, say $10-20 more a week, to help cover the upfront costs of a solar system. 

If I decide to put solar panels on my rental property, what are my responsibilities? 

As a landlord, you hold a certain level of responsibility for the changes and ongoing maintenance of the house you are leasing. If you decide to install solar panels on your rental property, you’ll also become responsible for the maintenance and servicing of the PV system. 

Some of the responsibilities and costs involved with solar include: 

·       System installation costs (if it is a new system being installed) 
·       System maintenance costs (including cleaning and servicing) 

You may wish to divide these responsibilities with your tenant as part of your rental agreement, however, as the landlord, you will still likely need to foot the bill for any maintenance required on the system. By dividing these responsibilities up, it may just mean that your tenant is required to alert you of any potential damages or issues with the system to allow for timely repairs and ensure the system’s longevity. 

Any duties required of your tenant should be detailed in the tenancy agreement to avoid any discrepancies or disputes. 

Alternatively, you may wish to have the system cleaned and serviced between tenants, to ensure it is running at full capacity. This however may be a costly endeavour, especially if you are only accommodating short-term leases. 

What if my tenant wants to install their own solar panels? 

Ultimately, as the property owner, whether or not you allow your renter to install solar panels is entirely up to you. If you allow them to install a solar system though, be sure to a arrange a written agreement with them first, in order to best decipher what this means for the ownership of the system, once the tenant moves out (e.g. will the tenant remove the system when they move?). 

If you are not comfortable with letting your renter install their own solar panels, you may suggest that they look into a portable solar system or sign up to a community solar garden. 

Will I receive a solar feed-in tariff for my investment property? 

Solar feed-in tariffs (FiTs) are rates that electricity retailers credit homeowners on their bills for exporting leftover power back into the grid. Typically, a power bill is in the name of the tenant residing at the property, as they are the one consuming energy. If this is the case, you as the landlord will not have direct access to the solar feed-in tariff. 

However, owners may wish to make an arrangement with the tenant(s) regarding any credits earned. Below are some potential agreements investors could make with their tenants. Keep in mind this is a general guide only and it’s best to contact a financial advisor or tax accountant who can best assess your needs. 

Place the electricity account in the tenant’s name, they pay for power usage and receive the credits from the FiT for exporting any unused solar energy. 

Put the landlord’s name on the electricity account, who pays for power usage on behalf of the tenant and then asks the tenant to pay back the full amount, minus any credits earned. In this scenario, landlords can see what was earned from the FiT but does not benefit from any credits. 

Place the electricity account in the landlord’s name, who pays for energy usage on the renter’s behalf and then asks the tenant to pay back the full amount, including what the credits have subsidised. In this scenario, the landlord can absorb the credit for their own use. 

The electricity account is placed in the landlord’s name, who pays for energy usage on the tenant’s behalf, absorbs the credits earned and then includes the electricity costs as part of the rent. 

All of the arrangements above should be discussed prior to leasing in order to avoid confusion over the rental agreement. Again, it’s best to get in touch with a tax or financial professional. 

Solar Plans & Prices 

Below you’ll find a selection of solar deals that are available in New South Wales, Victoria, Queensland and South Australia. These are solar-specific plans that generally offer a higher feed-in tariff than those offered on standard power plans. Just make sure that a high FiT isn’t concealing inflated usage and supply rates though. 

Can I get a solar rebate on my rental property? 

Yes, you may be eligible for a rebate when installing solar panels on your rental property. The availability of these rebates however, will depend on your location. As it stands, Victoria is the only state offering a solar panel rebate to homeowners. This rebate is available under the ‘Solar for Rentals’ program, in which landlords receive $1,400 to help reduce the upfront costs involved with solar installation. 

To be eligible for the Solar for Rentals rebate, Victorians must meet the following criteria: 

The property is currently tenanted with a rental agreement in place. 

The combined household income of the tenant(s) is under $180,000 per year. 

The property is valued under $3 million. 

There are no solar panels already installed on the property. 

The property address has not previously received a rebate under the Solar Homes program in Victoria. 

Landlords can also apply for an interest-free loan in Victoria to help with solar installation costs. For more information on this program, it’s best to head to Victorian government’s solar website as eligibility details may change in the future. 

Is it worth getting solar panels on my investment property? 

Installing solar panels on your investment will depend entirely on your individual circumstances. While there are great long-term benefits involved with solar power, this undertaking is a large financial commitment that requires a bit of homework. That’s why it’s important to do your research and gather quotes where possible before making a purchase decision. 

If you decide that solar is the right move for your rental property, be sure to check out our latest report below to see which installers Aussies think are the best in business. 

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