Solar Panels on Rental Properties: Investment Case

Solar on rentals can work, but the payback is slower than for an owner-occupier because your tenant gets most of the bill saving and you pay the capex. You do, however, get the EPC jump and a sale value premium.

Costs in 2026: panels and batteries

Typical 2026 install prices:

• 3 kW system: GBP 5,000-6,500.
• 3.5-4 kW system (standard 3-bed): GBP 5,500-8,000 installed, depending on roof and region.
• Battery storage: Adds GBP 4,000-6,000 for a typical 5-10 kWh battery.
• A 3 kW + battery package is now around GBP 9,500-10,000.

Zero-rate VAT: Since April 2022, residential solar PV and most associated materials (and batteries when installed with PV) qualify for 0% VAT in Great Britain. That continues in 2026, which is already baked into the prices above.

Smart Export Guarantee (SEG) income

SEG pays you for electricity exported to the grid, nothing for generation.

Typical 2026 SEG rates:

• Low / default tariffs: 5-7p/kWh.
• Competitive flat-rate deals: up to 15p/kWh.
• Best time-of-use / dynamic tariffs: 15-25p/kWh at peak export, but more complex.

Most 3-4 kW systems earn GBP 100-400/year SEG income depending on export and rate.

For rentals where the tenant is the bill payer: Export payments go to whoever's name is on the SEG contract (your company or the tenant, depending how you set it up). If the tenant signs the export contract, they capture SEG as well as bill savings.

EPC and value impact

EPC impact

A typical 3-4 kW PV array will improve EPC by 1 band, sometimes 2 on an average gas-heated D/E-rated house, especially if combined with LED lighting and minor fabric upgrades.

This can be enough to push a marginal D 59-61 up to C 69-71, ticking the 2030 EPC C box by itself on some stock.

Value impact

• Rightmove 2023 study: improving EPC from D to C adds ~3% to value on average.
• Swansea University 2024 study: homes with solar sell for 6.1-7.1% more, on average.
• Other summaries put typical uplift 4-6%, sometimes up to 14% for "eco-homes" in certain markets.

On a GBP 250,000 house:

• 4-6% uplift = GBP 10,000-15,000 headline premium, which can easily cover a GBP 6-8k solar install if buyers in that area value EPC and lower running costs.

Landlord-specific considerations

Who actually benefits from the power?

If tenant pays the bills (usual AST):

• Tenant gets bill savings (often GBP 350-600/year at current tariffs on 3-4 kW).
• You get:
• EPC uplift and MEES compliance headroom.
• Sale value uplift.
• A stronger lettings pitch ("bills lower than competing stock").

If you pay bills and rent includes utilities (HMOs, corporate lets, SA):

• You capture both bill saving and SEG, so the payback starts to look more like an owner-occupier.

Planning permission and leases

Most house roofs: solar PV is permitted development in England and Wales if:

• Panels do not project more than 200mm from the roof surface.
• They are not above the roof ridge line.

Flats and leaseholds:

• You often need freeholder consent, and you may not own the roof.
• Management companies can block installs.

Conservation areas / listed buildings:

• You may need planning permission and/or listed building consent; some councils resist panels on front-facing roofs.

Maintenance and insurance

Panels have 25-year performance warranties, inverters 10-12 years.

Maintenance is mostly:

• Occasional visual checks and maybe cleaning.
• Budget GBP 1,000-2,000 to replace an inverter around year 10-12.

You must:

• Notify your insurer; expect a small premium increase.
• Make sure scaffolding and works are properly risk-assessed when tenants are in situ.

Worked example: 3.5 kW on a 3-bed rental

Assumptions:

• 3-bed semi on mains gas, EPC D 60.
• 3.5 kW south-facing solar system, no battery.
• Cost: GBP 6,500 installed (mid-band).
• Annual generation: ~3,300 kWh.
• Tenant uses 60%, exports 40%.
• Electricity price: ~28p/kWh (blended Ofgem cap 2026).
• SEG rate: 7p/kWh (basic tariff).

Savings and income

Tenant's bill saving: 60% of 3,300 = 1,980 kWh self-consumed. 1,980 x 0.28 = GBP 554/year off their bill.

Export: 40% of 3,300 = 1,320 kWh exported. 1,320 x 0.07 = GBP 92/year SEG income.

If you hold the SEG contract, your annual cash return is GBP ~92 plus whatever rent premium or void reduction you can achieve. If tenant holds SEG, your direct cash return is zero.

EPC and value

PV likely pushes EPC from D 60 to C 70-73 on this house.

If value is GBP 220,000, a 4-6% premium means GBP 8,800-13,200 extra sale value.

Payback for you as landlord

If tenant pays bills and SEG:

• Direct cash return: essentially nil.
• Your "return" is EPC compliance, rentability, and capital value uplift.
• You only monetise it when you re-let faster at a better rent, or sell.

If you wrap bills into rent (say an HMO at GBP 1,800/month including bills):

• You capture GBP 554 + 92 = GBP 646/year in reduced electricity outgoings.
• GBP 6,500 / GBP 646 = 10-year payback, in line with owner-occupier estimates (10-15 years).

For a straight AST with tenant paying bills, the financial case is weak on yield alone but stronger once you factor:

• You avoid more expensive fabric measures to hit EPC C.
• You may get measurably higher rent and lower voids in tight markets where energy bills matter.

What forums get wrong about solar on rentals

Myth 1: "Solar always pays back in 6-8 years, even on rentals."

Reality: Current numbers put payback at 10-15 years for owner-occupiers, and longer for landlords unless you are paying the bills.

Myth 2: "SEG pays 15-25p/kWh everywhere."

Reality: Best tariffs hit 15-25p/kWh, but many standard SEG deals are 5-7p/kWh, and most solar owners who do not shop around sit at the low end.

Myth 3: "Solar is pointless for EPC, only insulation matters."

Reality: A decent PV system usually adds one EPC band, sometimes two, and that directly raises value (3-7%) and helps hit the 2030 EPC C requirement.

Myth 4: "Landlord gets nothing because tenant gets all the savings."

Reality: The tenant gets most of the bill benefit, but you gain: EPC uplift, capital value, and a stronger lettings pitch. On HMOs or all-bills-included lets you also get the bill saving and SEG, bringing payback into owner-occupier territory.

Myth 5: "Planning is always a nightmare."

Reality: On standard houses solar is permitted development; problems only really kick in with listed buildings, conservation areas and flats/leases where you do not own the roof.

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