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If you come across a home you love but discover it has leased solar panels, it’s up to you to decide whether it’s worth pursuing.
After all, leased panels, which might initially seem like nothing more than “cool tech,” can make things tricky. They may complicate the sale, transfer of ownership, and even your eligibility to lock in a mortgage.
By understanding what a solar lease actually is and what you can do if a potential home has one, you’ll be able to make the most informed decision for your unique situation.
What it means to buy a home with leased solar panels
A solar lease is a long-term rental agreement—usually 20 to 25 years—for solar panels that sit on your roof. If you have one, you make monthly payments to a third-party provider like Sunrun or Vivint to “rent” the energy that the panels produce.
While you don’t own the panels outright, they may provide you with electricity—often at a more affordable rate than what you’d pay your local utility company. Since a solar lease won’t magically disappear after you close, it may impact your loan approval if it’s not handled properly.
“Also, the solar panel lease might include a riser or a percentage of the monthly payments that go up each year. A lot of solar leases have a 3% riser, but there are leases available that do not have a riser,” explains Ben Zook, owner and solar panel system designer at Belmont Solar in Gordonville, Pennsylvania.
If you buy a home and the seller is in the middle of the solar panel lease, there are essentially two options. “You assume the lease as the buyer, or the seller buys out the lease before selling the home,” says Zook. You may be able to negotiate another arrangement with the seller before you finalize the sale but doing so can be tough.
Lease terms and payment structures vary by providers so it’s up to you as the buyer to read the lease agreement carefully. Otherwise, you might face unwanted headaches and financial surprises down the road.
The benefits of having solar panels on your home
Even when they’re under a lease, solar panels can offer several perks, including:
Electrical savings
Perhaps the most obvious benefit of solar panels is lower electricity bills. This is particularly true if you’re in a high-rate region.
Easy maintenance
In most cases, you don’t have to do much to maintain the solar panels. The solar company typically insures them and takes care of any maintenance or repairs on your behalf.
Increased value
Solar panels are often attractive to eco-conscious buyers. As a result, they can boost the perceived value of the home.
No upfront costs if leased
Installing solar panels may run you $15,000 to $30,000. You can avoid those hefty upfront costs with leased panels.
The main motive behind leasing solar panels is financial. The cost of purchasing them may have been (or is) too high.
But here’s what can go wrong
While leasing solar panels has its advantages, it may also lead to the pitfalls, such as:
Payment responsibility
Even if you don’t want the solar panels, you might be on the hook for lease payments. Depending on your situation, these payments can take a toll on your overall homeownership budget.
Mortgage issues
Some lenders, especially those who offer government-backed loans like FHA and VA loans might not approve a mortgage with leased solar panels. This is particularly true if the lease terms are vague or can’t be transferred.
Potential for no financial benefit
There’s no guarantee that solar panels will save you money. “The solar savings might not cover the lease cost, especially if the original lease agreement had a riser that went up faster than the cost of electricity did,” notes Zook.
Keep in mind that the Trump administration rolled back several clean energy incentives—including provisions that helped subsidize or support solar adoption through energy credits. While this affects new installations more than existing leases, it does shift the financial equation, especially for buyers who expected savings or tax benefits.
Don’t want the panels? Here’s what removal could cost—and who should pay
If you decide you’re not a fan of solar panels, don’t worry. There may be a solution. First, you can ask the leasing company to remove the panels. The cost to do so varies widely and depends on several factors, including the number of panels and whether you need a lease buyout and/or roof repairs.
You can expect to pay $1,000 for a basic system removal with no damage to $25,000 or more when a lease buyout and roof repairs are included. Another option is to request that the seller pay for the panel removal. You can also negotiate a buyout of the lease as a condition of the sale.
Regardless of which route you take, get a copy of the lease agreement right away. Then, ask if there’s a lease buyout or end-of-term ownership option. Don’t forget to do the math and factor monthly solar payments into your budget before you sign on the dotted line.