Proposals for solar farms on green fields or farmland can often be controversial, with countryside lovers arguing that a better place for solar panels is on rooftops. Few would disagree that this is not a good idea. Yet this is not happening in sufficiently large numbers — not because of the obstinacy of owners, the structure of a building or even the cost … but the legal arrangements of ownership.
On a freehold property, fitting solar panels on the roof is relatively straightforward. But, in the rental sector, there is little incentive for landlords to upgrade their properties, despite new rules requiring rentals to be more energy efficient. So tenants mostly miss out on the advantages of added warmth, comfort and reduced bills.
Blocks of owner-occupied leaseholds flats come with their own legal difficulties. Some 4.86m dwellings in England are leasehold, or some 20% of housing stock, so these problems are not insignificant.
In a block of flats, the freeholder will usually own external parts of the building including the roofs and walls where solar panels can be placed. Individual leaseholders do not usually own the roofs or the walls, although they may form an association which collectively owns the whole of the property.
Solar power is cost effective, flat owners told
A case study by the management company of a block of some 180 south-facing flats on the south coast suggests solar power would be very cost effective. The block uses some 90,000 kwh per year for communal lighting, lifts and to pump water.
A local solar panel installer estimated that solar panels on the roof could supply all the communal electricity with a cost around £74,000 for the installation – a cost of around £400 to each leaseholder.
The payback period would be 16 months and after that the leaseholders could profit from exporting electricity to the grid. The savings/profit over 20 years would be £1.5m.
But from whatever angle the management company chose to approach this, there would be daunting problems. If an enlightened freeholder wishes to put solar panels on a block then Prof Susan Bright, of Oxford University, in an essay Futureproofing Flats, notes that:
“Individual leaseholders have the right to object to installation of solar panels even where this is agreed by the management company or all the other leaseholders. In practice, few leases in the private sector enable landlords to pass on the costs of this work as they will usually count as ‘improvements’ and not fall within the service charge provisions of the lease.
“As the advantages of warmth, comfort and reduced bills will benefit the flat owners this means that there are no incentives for landlords to upgrade. Even in resident-owned blocks the inability to pass on costs through the service charge provisions means that in practice they cannot do the works.”
Legally, landlords have last word
Alternatively, if the leaseholders wish to initiate such a scheme, then they are faced with obtaining the approval of the landlord. The management company in the case above sought the help of the Environmental Law Foundation to fully understand the obligations of both parties in the lease before approaching the landlord — a finance company.
The lawyers advised that the law is weighted in favour of the landlord. The lease states that the landlord can refuse the request without giving a reason, can charge rental for the space and also charge for any expert advice they need from lawyers, engineers and the like. In addition, as Prof Bright points out, the leaseholders may be faced with the inability to pass on the costs through increases in service charges.
Many commercial buildings, factories, warehouses are leasehold, so the problem does not only effect residential property.
There are other alternatives to site solar panels, such as car parks, motorway bridges and so on. But if UK is going to meet the full potential for harnessing solar power, then changes in leasehold laws and carrots and sticks to private landlords are going to be required.
Successive governments have indicated that they wish to reform leasehold — a form of ownership almost unique to the UK. But reform usually falls low on the agenda.
If the costs of electricity continue to escalate, then leaseholders and private tenants will be at a considerable disadvantage as they will find it impossible to take advantage of solar power. The system of access to the cheap electricity through solar power will be inequitable and the potential for harnessing the sun in the UK will be diminished.