Author: David Lindsay, Managing Director, Certi-fi Schemes Limited
So…how does the installation of solar photovoltaics (PV) affect property prices, really?
The Energy Performance Validation Scheme (EPVS) ensures that consumers get the right information when they invest in a renewable energy system.
In a market that was hit hard by claims management companies, we’ve instilled confidence in the accuracy of estimates. Lenders are returning, and our members have access to consumer finance once more, giving them the opportunity to increase their sales.
As part of our validation process, we speak to a lot of consumers every day. Why? Because we believe that presenting the right information isn’t enough, it also needs to be understood. We’re hearing that one of their motivations for buying is that their home’s value will increase following the installation of solar PV. Sometimes, this has been a general comment made during a sales presentation, but other times some very specific values have been quoted.
In more than one case, a customer was told that their solar installation was essentially ‘free’, because their house would immediately increase in value by more than the cost of the system.
How would the salesperson evidence this statement? It could potentially open up the lender and installer company to a claim under Section 56 of the Consumer Credit Act 1974 (Section 56, essentially, is misrepresentation by suppliers, inducing a consumer to make a purchase).
At worst this can lead to a rescinding of the contract – refunding all monies, compensating, and putting the consumer back into a pre-contractual position.
But is it misleading?
Will the installation of a solar system increase the value of a property by more than the amount of the contract itself?
Does the installation of Solar PV increase the value of a domestic property in the UK?
A quick internet search throws up hundreds of results, most of which, although not all, answer this question positively. Once we take out anecdotal statements, individual case studies, out of date research, manufacturer or retailer studies, and references to studies that are no longer publicly available, there are just a handful left.
Of these, there is a wide discrepancy on what the research ‘proves’.
Most recently, a 2024 paper by Swansea University suggested that houses with solar panels tend to sell at a premium of between 6.1% – 7.1%. The research took an impressive 1.5 million house sales from Zoopla (although it should be noted that the date range was from 2012 – 2018, when the Feed-In Tariff was still available) then used machine learning tools to overlay this data with Land Registry prices. It’s a pretty robust study by most standards, but it is very clear to point out that there were significant regional and demographical differences and outliers.
A 2022 study by insurer Admiral went further, suggesting that buyers were prepared to pay 25% more for homes with solar panels than those without. Data was taken from Rightmove selling price data for similar properties in 13 different UK cities. (In the same study, Heat pumps were also shown to add ‘up to’ 10% of property value).
In their 2021 study, trade association Solar Energy UK (SEUK) stated that analysis of more than five million property sales shows that installing PV on a typical home could increase its value by £1,891 – £2,722 – or, in percentage terms, a property price premium of c.0.9% – 2%.
In other words, the SEUK study suggests a property price increase of around 12 to 24 times less than Admiral.
Added to this, there are also some reports that state that solar panels can make a property less desirable to sell than one without. Reasons stated are that the aesthetics can lead to a reduction in kerb appeal, some may be put off by the maintenance of the system, and others may plan a renovation where the removal of the panels may be necessary.
We found this 2011 study, which stated that 17% of questionnaire respondents were less likely to purchase a property with solar PV panels (note that the study did not confirm the number of respondents and was localised to the Oxford area). It is highly likely that, given the proliferation of solar installations and the increase in electricity prices since the study, attitudes will have changed.
More recent comments we found to this effect are entirely anecdotal (‘an estate agent said …’). It would be reasonable to assume that some buyers may be put off buying a solar powered property, but that this will be a very small percentage of the population.
In between the percentages shown in the Admiral and SEUK studies is a government study that we often see quoted in sales presentations and appears to show that making energy saving improvements to your property could increase its value by 14% on average – and up to 38% in some parts of England.
What’s important to know about this study (apart from it being published in 2013) is that it relates to any installation that results in the increase of the EPC rating – so insulation or a new boiler, for example, would be included in this. That said, solar PV would increase the EPC rating, so whilst the claim is correct, it should be made clear to the consumer that it is not specific to solar.
These conclusions were reached in a more recent 2021 study by Halifax, that the increase in an EPC banding increases home values, and that other efficiency measures can contribute towards this – not just solar. In the full report, they even come up with some very specific figures linked to the increase of upgrading from one EPC band to the next one up. Crucially, they are ‘averages’ – there are huge regional differences and therefore they will not apply to a specific consumer.
Rightmove’s 2023 Study of 300,000 properties showed increases of twice that of the Halifax Study – we’re seeing a theme developing here-a wide variety of answers to the same question!
Evidence to show that the installation of solar PV increases the value of a domestic property
The above studies clearly show that the installation of solar PV increases the value of a property. However, given that they also show that the range of increase is between 0.9% and 38%, it could be seen as being misleading if the consumer was presented with one of the higher figures quoted or actually, any figure at all. All the studies quote ‘averages’ and I recall an ex-boss of mine challenging a marketing manager during their presentation with the phrase, ‘don’t talk to me about averages, a person can drown walking across a lake an average of three feet deep’.
But it’s the role of a salesperson to ensure the consumer has the correct information to make a buying decision, so whether the effect on the property’s value is part of their presentation, or whether it’s a direct query from the potential customer, we think that clear guidance is preferable to ignoring the issue and, instead, waiting for the claims management companies to mount a new campaign.
How EPVS is supporting its members to represent the facts
We’re working with our EPVS Members to support their sales models whilst remaining compliant. Some have chosen to link their sales documents to all of the solar studies above, so that the consumer can see the very wide variation, stating that a property may increase in value with the addition of solar generation, but that it’s impossible to say how much.
We’ve ensured that our customer compliance calls include a discussion on property values, so that we can confirm that consumers aren’t being unintentionally misled, and so that we have recorded confirmation that they understood that any increase is speculative and can’t be guaranteed. This protects the installer, and the lender, should there be any future complaint or claim.
Market confidence
For the solar market to continue its impressive deployment journey, which continues to accelerate, we need to retain and improve confidence. Clear, unambiguous, and balanced information forms a big part of doing this.
Do you have an opinion, or have you had an experience, relating to the above?
Let us know by emailing info@epvs.co.uk
