There’s a common phrase that is often thrown around in the industry: property value. The home improvement industry, the rental industry, and the renewable energy industry, all use this phrase so casually that it often gets hard to pick where this phrase actually makes sense and where it doesn’t.
So, if you’re here, it means that you’ve also heard that solar panels add property value. But since solar is a new trend, you might wonder: Do solar panels add property value? or not?
To understand the answer, let’s first understand the basics of the technology and then assess the market trends:
The Basics of Solar Panels and Property Value
Solar cells convert light energy (photons) into electric energy (electricity). Since 2013, solar systems have seen considerable growth as they help homeowners, commercial property owners, and businesses lower their reliance on traditional sources of energy and lower their electricity bills.
The energy generated through panels and used in home and business operations also allows owners to play their role in preserving the environment for generations to come.
Property value is influenced by a range of factors including the age of the property, the upkeep and maintenance, and the location. So any additional factor that can lower maintenance costs or energy costs in the long run can be favorable for potential buyers.
So, adding solar alone may not dramatically increase a home’s market value. Combined with other elements, they can make the property more attractive to potential buyers who value sustainability and cost savings.
Market Trends and Data on Solar Panels and Property Value
A few studies have been conducted on the correlation between solar panel installation and property value. One of the most popular of these studies is one conducted by Zillow, a real estate marketplace. This study was conducted in 2019 and revealed that homes with solar panels sold for an average of 4.1% more than comparable homes without them.
While this research focuses on the U.S. market, similar trends have been observed in the UK. This study is now also 5-6 years old. However, the market trend regarding the popularity of solar suggests that this figure will be even greater.
In 2010, there were only 28,211 households with solar panels. In just 14 years, this figure grew by 4,862%. Yes, this comma is not an error!
As of November 2024, 1.4 million UK homes are equipped with panels. This means that homes with solar panels will fetch a far greater value than predicted by Zillow.
It also means that soon enough, homes without solar panels won’t get a good value as potential buyers would want a property that already comes with the system installed and working. Since solar panels last 30-40 years, this is quite possible in the next decade.
Economic Benefits of Solar Panels
One of the primary reasons homeowners choose to install solar panels is the potential for significant cost savings. When a home comes pre-installed with a system that can allow the buyer to save money on bills, it can make it quite attractive to buyers. Plus, with the energy price cap in the UK set to increase by 1.2% at the start of 2025, it makes solar properties more and more valuable.
The average UK household with solar panels can save between £190 and £700 annually on energy bills. This huge variance is because the savings depend on the amount of electricity generated by the panels. These savings can be even higher in homes with larger systems, particularly in areas with high sunlight exposure. Homes might even save up to 90% on energy bills with the right-sized panels. In many cases, homeowners can even earn with solar by selling their excess production under the Smart Export Guarantee.
While the upfront installation costs of solar panels may deter some buyers, the long-term economic benefits can outweigh the initial investment. In fact, the financial savings may contribute to the property’s overall value, making it more desirable to potential buyers, especially those who are energy-conscious.
So the economic benefits of solar are two-pronged. One is the savings on energy bills and the other is an increase in the property value.
Environmental Impact and Buyer Appeal
As environmental concerns continue to grow, many homebuyers are prioritizing sustainability when choosing a new property. Solar panels align with the increasing demand for green homes, offering a tangible way for homeowners to reduce their carbon footprint and contribute to a cleaner environment.
A property equipped with solar panels can appeal to eco-conscious buyers who want to invest in homes that support renewable energy. In fact, homes with solar panels are often marketed as “green” or “eco-friendly,” on retail marketplaces to appeal to the eco-conscious buyers.
Beyond the immediate environmental benefits, solar panels also offer long-term sustainability. As technology improves, solar systems are becoming more efficient, reliable, and cost-effective. This enhances their appeal to buyers who want to invest in a home that will remain energy-efficient for years to come. In addition, solar panel installations are seen as a step towards reducing dependency on fossil fuels, which further aligns with broader environmental goals.
Potential Challenges or Downsides
While solar panels offer numerous benefits, there are potential challenges to consider.
Initial Installation Costs
One of the primary concerns is the upfront cost of installation. The price of a solar system can range significantly based on factors such as panel type, system size, and installation fees. This initial investment can be a barrier for some homeowners. Plus, if they are only installing it to fetch a higher value and not use it for themselves, they might not get much from it.
Maintenance and Repairs
Even though solar panels require minimal upkeep, like any electronic product, occasional cleaning and repairs are necessary to ensure optimal performance. Homebuyers who cannot invest time in maintenance might not be influenced by a UK property with a solar installation.
Impact on Home Aesthetics or Buyer Preferences
Another challenge is the aesthetic impact of the panels. Some potential buyers may not appreciate the appearance of solar systems on a roof, particularly if they are bulky or not well-integrated into the design of the home. So, the look could deter certain buyers, particularly those who prioritize the aesthetic appeal of the property over energy efficiency.
Case Studies and Real Estate Expert Insights
At Samso Solar, we have case studies that prove that installing solar panels is a high-return investment. Here are some testimonials from real estate agents and a case study to prove it:
Testimonials from Real Estate Agents
Real estate professionals often see solar panels as a valuable feature that can help a home stand out in a competitive market.
According to Jane Smith, a real estate agent based in London, homes with solar panels are increasingly appealing to buyers who are looking for long-term savings and energy efficiency.
“Solar systems have become a significant selling point for properties in the UK, especially in urban and suburban areas where energy costs are high,” says Thomas Brown, a real estate agent based in Manchester. “
Examples of Properties with Solar Panels
In a recent case, a property in Bristol with a high-quality solar system sold for 5% more than a similar property without solar panels. This example highlights how solar energy can boost EPC rating and thus, property value, particularly in areas where sustainability is a key selling point.
Local Market Variations
In the property market local market variations do play a role. In some regions, solar might not have as strong an impact on resale value due to factors like climate, local energy policies, and buyer preferences. For instance, in colder areas with limited sunlight, solar panels may offer less of an advantage compared to regions with higher sunlight exposure.
Conclusion
The impact on property value can vary based on factors like location, system quality, and market trends. In most cases, solar projects can make a home more attractive to potential buyers. However, the geographic location that might affect the panels’ efficiency and solar energy performance might not add considerable value to a property.
But in locations where the sun shines almost all year round, there are great savings in the long term.
So, are solar panels worth it?
The answer is mostly yes. These savings, coupled with the appeal of an eco-friendly home, make solar a worthwhile investment for many homeowners. The solar panels increase property prices where they are efficient. The investment is worth it for both; those who are considering selling off their property immediately and those who want to sell it off in the near future.
