Investors, It's Time. Solar To Eclipse Property Rental Market
We all know the benefits of solar power. Not only is it better for the environment, installing solar panels can drastically reduce household energy costs.
For property investors in the past, the cost of installing a photovoltaic (solar cell) energy system always outweighed the benefits. Landlords couldn’t justify the expense of installing a solar system when the reduced energy bill went to the tenant. And hiking the rent to cover the installation never went down well with renters.
These days, there are options for landlords and tenants alike to benefit from the installation of solar panels. So, solar is now a viable option for investors. Let there be light!
A company offering one such option is Perth-based Matter Solar. Matter Solar installs solar on the property, then grants you income as landlord from selling power to the tenant – while guaranteeing the tenant a 20 per cent discount on their current electricity rates. Another way it can be structured is by having landlords lease their roof space to the tenant to install a solar system – if they are on a long lease. Tenants can arrange the install and finance.
As a Sydney apartment owner, I’m exploring how to use the roof space in our Camperdown building to generate energy to power the common areas. It will reduce the operating cost of the building, making it more desirable for tenants – as well as owners like me and you.
According to James Cronan, the director of Sustainable Future Group, another model also exists for apartment buildings, where the body corporate can own the energy infrastructure (smart meters, switchboard, and solar), bulk buy energy at wholesale rates for the building, and use their solar to reduce energy prices further. This is called an embedded network.
It’s a win-win. The tenant pays less than they currently do for their electricity bills and the landlord earns revenue from selling the power back to the tenant.
It’s worth looking into: the installation of solar can dramatically increase the overall value of a property. Plus, with the soaring cost of electricity – and climate change a massive concern for many people – it’s a feature homebuyers as well as renters are sure to be looking for in years to come.
A US study even found that homes with solar panels benefit from a ‘solar premium’ when they’re sold because buyers are willing to pay more for a home with solar panels. From an investment perspective, the rapidly growing number of responsible investors looking to align themselves with a more carbon conscious economy is also worth noting.
To reiterate, solar benefits:
- Property investors with houses who gain from the power savings;
- Property investors with apartments who can maintain rental costs for tenants;
- Property investors who can rely on a guaranteed income stream to fund the loan required to pay their mortgage.
The information above is general in nature, and you should always seek professional advice when making financial decisions.