Solar Panels vs selling - will you get your money back when selling your property?

Solar panels cost a lot of money to install, and property owners need to ensure that they recover this expense when they sell. This article describes when solar panels will and will not increase the market value of a property, and how to plan accordingly.

 

As professional estate agents, we get asked about solar panel electrical systems for houses quite often. Many homeowners want to know whether installing solar power systems to their houses would increase the value of their properties. The main concern is whether they will be able to recover the costs of installing solar, or even make a profit, when they sell their house. The answer to this question isn't straight forward – but is explained throughout this article.

First, you need to consider whether the market that is likely to buy your property, is able to afford solar. If most properties in your neighbourhood have solar, it is a good indication that the typical buyer for your house would be able to afford solar. If most of the houses in your neighbourhood do not have solar, it is a good indication that the typical buyer in the market for properties in your area either does not want solar, or cannot afford spending money on solar.

As rule of thumb, if the typical buyer in your area can afford solar, and is likely to spend money on acquiring solar, there is a good chance that you will be able to increase the value of your property with the addition of a solar power system. If you are located in an area where the average price bracket is above say R2.5million, buyers considering the area would likely have enough money to afford solar. On the other hand, if your house is located in a low price range area, typical buyers would likely not be able to afford solar systems, or would likely rather spend money on something which they consider more valuable.

This brings up a second factor to consider: the utility and accommodation that the market typically expects from a property in your area. You need to consider how your property compares to the average property in your area in terms of bedrooms, bathrooms, living space, parking and entertainment features. As an example: If you are located in a neighbourhood where most of the houses have four bedrooms and a double garage, but yours only has three bedrooms and a single garage, your property would remain inferior to the average house in the area, even if you were to install solar. In such a case, adding a garage or bedroom would most likely add more value to your house than adding solar. If you do have a budget for solar in mind, ask yourself what buyers in your area would most likely want to spend that budget on for improving your property.

A third factor to consider, is the danger of over capitalization on your property. If your property already offers more accommodation and utility than the average house in the area, you are running a higher risk of over capitalizing your property if you spend additional money on improving it.

Having said all that, what do you do if you really want to install solar power for your property? As with any other improvements to a property, it is always a good idea to ask a professional estate agent’s opinion before deciding. If your area allows you to improve your property value by adding solar, you are likely to recover the cost thereof when you sell your house. If adding solar is however unlikely to improve your property value because of the market in the area, you could always install it in such a way that it is easy to remove if you ever have to sell the house in the future.