Introduction
As the world turns towards cleaner energy solutions, the adoption of solar panels is becoming the hallmark of sustainable living. Individuals and businesses are increasingly looking to harness the power of the sun to reduce their carbon footprint and electricity bills. While installing solar panels on your property is a fantastic idea, it is important to remember that, if you are a tenant, there may be restrictions on your lease that affect your ability to install solar panels.
Before you start to harness the power of the sun, there are a few critical considerations to take into account and some exciting possibilities to explore.
Key factors to consider
Solar panels and your Lease Agreement: A crucial conversation
Before you think about mounting those sleek, energy-generating panels on your roof, it is imperative to review your lease agreement. Installing solar panels is considered to be what is referred to in a lease agreement as “tenant installations”. As such, the tenant must obtain consent from the landlord. While this may sound like a daunting task, it's important to note that many landlords are just as eager to embrace sustainable living as their tenants.
It's an excellent opportunity to have a conversation with your landlord about the benefits of solar panels. Lower utility bills, increased property value, and environmental consciousness are all compelling points that could persuade them to give their nod of approval.
The lifespan of solar panels and lease durations
The lifespan of solar panels typically ranges from 25 to 30years. Some retail lease agreements can last for similarly long durations. While seeking the landlord’s consent for the installation of the solar panels, it is crucial, before installation, to address the ownership of the solar panels when the lease ends.
Ownership of the solar panels: What options are available?
There are two common approaches to resolving the issue of ownership. In the first scenario, as the solar panels are considered tenant installations, it becomes the tenant's responsibility to remove the panels and make good any damage to the roof or other parts of the premises (e.g. electrical systems) at the end of the lease. This option is more favourable for longer leases, as the solar panels might require replacement at that point. However, this does mean additional costs for the tenant.
The second approach is to transfer ownership of the solar panels to the landlord. This alternative might be more appealing, offering a simpler resolution for both tenant and landlord. If the solar panels are appropriately installed on the premises, the tenant avoids the financial burden of removing the panels and the landlord enjoys the increased attractiveness of the property to future tenants.
Tenants might also consider whether to seek payment from the landlord for transferring the ownership of the panels.
Roof health and structural integrity: Safeguarding your premises
Solar panel installation requires secure affixing to your roof, and improper installation can potentially damage the roof surface. The removal of panels can have similar consequences. Naturally, your landlord will have concerns about potential roof damage, so it is imperative to address these concerns before installation commences.
We strongly recommend reviewing your lease agreement to understand your obligations regarding tenant installations. If your landlord has any concerns about the installation, you maybe able to address these through a Deed of Variation of Lease, to make clear what you are responsible for.
Electrical works and safety measures
Installing solar panels involves electrical works that must be carried out by a registered electrician. Ensuring that the associated electrical work adheres to Australian safety standards and is essential. When installing and removing solar panels, you may need to provide an electrical safety certificate to verify that the work again complies with safety standards and in the case of removal, that the roof has been returned to its original condition.
How Sharrock Pitman Legal can assist
Installing solar panels in a rented property can be a win-win situation for both you and your landlord. Accordingly, it is important to ensure that all of the tenant’s and the landlord’s rights and obligations under the lease are complied with during installation, and if necessary, removal.
Principal Lawyer Andre Ong is an Accredited Specialist in Property Law. He and our Property Law team can advise on all aspect of commercial and retail rental lease agreements including reviewing the rights and obligations under the lease and negotiating the terms to obtain the landlord’s consent for the installation of the solar panel.
The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.
Liability limited by a scheme approved under Professional Standards Legislation.
Andre is a Principal of Sharrock Pitman Legal.
He heads our Property Law Group and is an Accredited Specialist in Property Law (accredited by the Law Institute of Victoria). He also deals with Commercial Law. For further information, contact Andre Ong on his direct line (03) 8561 3317.
