Should a landlord buy solar for tenants? Many homeowners across Australia invest in solar technology, as this will contribute to lowering energy bills and at the same time be good for the environment. So, what if you are renting your home?
Here we will take a closer look at solar panels for rental properties.
How can you and your landlord benefit from solar panels?
There are many reasons to invest in solar panel technology. This is not only the case for homeowners who live in their own homes but also for landlords who let others rent their property.
Benefits of solar for tenants
If you rent your home, you can potentially cut your power bill without having to spend money on the solar panel system yourself. Your landlord will normally pay the installation costs, while you can enjoy the benefits.
Tenants can expect to pay significantly less for the energy they use. Living in a flat or house with solar panels installed is definitely a good choice. Especially when the energy prices are high.
Power generated by solar panels will reduce your own carbon footprint. The energy you use is from a renewable source. This energy production is beneficial for the environment.
Benefits for landlords
In most cases, the owner of the rental apartment or house will pay for the solar panels. The investment will also be beneficial for the landlord.
When you install a solar panel system on the roof of a rental property you may actually increase the value of the property significantly. Properties with solar panel systems are very popular on the market.
If you were to sell the property the value of the home will probably be higher than it would be without a solar system. Remember that a solar panel system will make the property more appealing. Potential tenants might be willing to pay more in rental costs.
A recent study was conducted on renters living in homes with solar panels. It found that tenants are willing to pay $19 more than they would for non-solar properties.
You will also receive a government rebate to reduce your costs upon installation. This can make the installation more affordable.
Feed-in tariffs with solar for tenants or landlords?
Installing a grid-tie solar panel system ensures that excess power will be sent back into the grid. The power provider will in return give you a feed-in tariff (payment).
The feed-in tariff can be given to the tenant or the landlord. This will usually depend on what kind of agreement you make.
The homeowner receives the feed-in tariffs, and not the tenants renting the property. If you have a typical 6.6kW solar panel system, this will usually generate feed-in tariffs amounting to a significant amount of money every year.
Issues related to solar technology for rental properties
If you invest in solar panel technology in your own home, you will be able to earn back the investment in a couple of years. Why? Well, because you save a lot of money thanks to lower power costs and feed-in tariffs.
Landlords, on the other hand, might not experience the repayment time to be this fast, as they don’t benefit from lower energy bills (it’s the tenants that enjoy this benefit). However, the landlord will still earn back the investment, it will just take a little longer.
When the landlord receives feed-in tariffs and higher rent, the investment will be earned back within 5 years.
The feed-in tariff is paid for a period of 20 years. Because of this, the landlord will be able to earn a significant amount of money – even though he or she does not experience the benefit of lower power costs.
State rebates for landlords
In some Australian states, landlords might be eligible for special rebate schemes. In Victoria, for instance, landlords may receive a solar rebate if they fulfil certain requirements.
Solar Victoria is providing a rebate of up to $1,400 for eligible rental providers to reduce the cost of installing a solar panel system on a maximum of two rental properties each financial year, subject to a Solar Homes Rental provider-Renter Agreement being signed.
You can reduce your upfront cost even further by applying for an interest-free loan to match the rebate amount.
Only one application is available per address, however rental providers can apply for up to two rental properties in a financial year provided all of the eligibility criteria are met.
Among the requirements, you will see that the property value must be $3 million or less and that the income of the tenant can’t be more than $210,000 per year. For more details visit Solar Victoria.
Conclusion: Should a landlord buy solar for tenants?
Yes! As a rental provider, you may benefit from investing in solar technology on your rental properties. Not only will the value of the property rise, but you can also expect the property to be more appealing to tenants.
The tenants are often willing to pay more for solar properties. And, in some cases, the landlord may also receive feed-in tariffs for excess power.
It might also be good to know that you are investing in clean and green energy. By installing a solar panel system on your rental property, you can contribute to lowering carbon emissions and doing something positive for our planet.