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In recent years energy prices have increased in tandem with a decrease in the disposable incomes of many families in Northern Ireland.

There has been a rise in interest in the use of renewable energy sources as a way to generate extra income or save on utility bills for the average household.

However, as more and more solar panels (photovoltaic or PV panels) spring up on the rooftops of our urban and rural landscape there are some legal considerations which, if ignored could end up with the consumer getting his fingers burnt.

There are two types of arrangement that a homeowner could enter into if in the market for solar panels. The first is to purchase the solar panels outright and install them to the house. The second is for the homeowner to enter into a contract with a company that provides and installs the panels to the roof of the homeowner. In the first example where the panels are purchased by the homeowner many of the legal complications are dispensed with. Whilst the homeowner has to bear the initial purchase cost, he is able to reap the rewards from the generation of electricity along with any available government incentives.

The legal implications of the second scenario requires further consideration before the homeowner enters into a contract or Lease with the energy company to install solar panels to the residential (or commercial) premises. A typical Lease will be for 20 years or longer. Although yet to be tested by our Courts in Northern Ireland, the general presumption is that an agreement or Lease between the supplier of the panels and the consumer would be protected and regulated by the Business Tenancies (NI) Order 1996. The application of this Order means that the supplier of the product has security of tenure meaning that each time the Lease is to come to an end the supplier would be entitled to apply for a fresh Lease and the owner of the premises could only defeat that application by using one of the exceptions in the legislation. The Northern Irish position is quite distinct from what would apply in other jurisdictions where the Business Tenancy Order isn’t applicable. In Northern Ireland it is impossible to contract out of the security offered in the legislation. This causes difficulty for homeowners in mortgaging their properties or when selling on their property where the prospective purchaser requires a mortgage as mortgage providers in Northern Ireland are more reluctant to allow the owner of the premises to enter into such arrangements.

Recently the Council of Mortgage Lenders (CML) issued guidance to homeowners applicable in Northern Ireland to the “rent a roof” situation. The guidance indicates that the mortgage company will require a Lease of Rights to be entered into between the homeowner and supplier of panels in lieu of a Lease that provides for security of tenure over the equipment on part of the providers. Whilst this guidance has provided clarity, it is likely that the providers of panels will not want to enter into the Lease of Rights nor is it definite that mortgage companies will accept a Lease of Rights.

If you are an energy supplier or the owner of premises interested in installing solar panels or another energy saving scheme then it is recommended that you seek legal advice.

Please note that the content of this article is for information purposes only and advice should be sought from a professional advisor.