Feed-in Tariff Payments on Change of Ownership

Feed-in Tariff Payments on Change of Ownership

With gas and electricity prices on the rise it is becoming increasingly popular for home owners to install renewable or low carbon energy generating equipment such as solar panels and wind turbines. Such equipment may qualify for Feed-in Tariff (FIT) payments that can be available for 10 to 25 years, representing a significant incentive to install generating equipment.

As FIT payments have now been around for a while, more and more properties which benefit from generating equipment are coming up for sale. This has raised the question of what happens with the equipment, and indeed the FIT payments, when ownership of a property changes.

Firstly, the equipment, once installed, becomes a fixture of the property and as such is assumed to form part of the property when it is sold. The issue of the FIT payments is less straightforward however.

The UK Government has issued a statement setting out their opinion on how FIT payments should be dealt with on change of ownership:

“Given the length of FIT payments (10 to 25 years), there will be frequent instances where the ownership of the property hosting the generating equipment on which FIT is paid changes. We expect standard property ownership rights to be applied to the ownership of the generating equipment. When ownership of that property changes we will expect the ownership of the generating equipment and FIT payments to also change and pass to the new owner of the property and this will need to be notified to the scheme administrator. It will be left to the market for the previous owner to be compensated for the remaining value of the FIT payments and on-site benefits (e.g. through a higher price paid for their property).”

In other words, the FIT payments should transfer to the new owner of the house but the previous owner is entitled to seek payment from the purchaser in respect of the value of the remaining payments. That is not to say the seller is entitled to the full value of all remaining payments. As the Government has set out, market forces will determine how much is to be paid. This basically makes it a matter for negotiation during the purchase process.

It may be possible for the owner of a property hosting generating equipment to assign FIT payments to a third party. Such an arrangement could allow for the original owner to continue receiving the payments by the new owner assigning them over. However, such an arrangement could be complicated and costly to set up and would need the approval of any lender providing a mortgage to the purchaser.

This is an emerging area of law and a fairly new consideration for those looking to sell or purchase residential property. As such is it extremely important to get good advice on these issues from the outset. Get in touch with one of our experienced solicitors to discuss matters in more detail if your purchase or sale might be affected by FIT payments.
This Briefing has been produced for information purposes only and is based on the law and other information available at the time of writing. We cannot be held responsible for any losses incurred through acting or failing to act on the basis of anything contained in this Briefing.

If you require advice on any of the matters referred to, please contact us so that we can advise you, taking account of your own particular circumstances and requirements.

Latest News