Buy-to-let or Solar Lease?
Being one of the safer investment vehicles in the UK, the buy-to-let property market has always attracted the low risk investor, but is it low risk for low returns. With UK property growth at a low 1.1% [Nationwide: May 2013], together with fewer incentives from lenders, it may be that the emerging Solar Leases Investment is what the buy-to-let investor has been waiting for.
For those considering investing in over-promising and under-delivering buy-to-let properties, here are a few of the costs you may not have calculated into your ROI:
- Agents’ fees are on average a staggering 10% of the annual rent
- The agent also cannot guarantee that the tenant will provide 100% occupancy, so always allow at least 1 to 3 months vacancy per year
- For annual maintenance costs subtract 5%
- For letting and management costs subtract, a further 3%.
Selling on is not as simple as you may think. With fewer buyers, reluctant lenders and added legal and professional fees, that bottom line ROI becomes less attractive when you consider your precious time is invested dealing with tenants, builders and estate agents. So, is it time to forget the buy-to-let?
The good news for the buy-to-let landlord is that the sun is shining on the UK Solar market, and has been for years with the government-legislated Feed-in Tariff (FIT) scheme. Becoming a micro-energy provider could be the property landlord’s answer.
Pension and investment firms have been capitalising on the scheme since 2010. Using the Free Solar lease - basically renting a roof and installing your PV (Photovoltaic) Solar system - guarantees an income for 25 years. The investor is the landlord of the roof space, and the sun is the tenant, offering 100% occupancy and guaranteed income! The income is linked to RPI, so it is inflation proof too.
The lease is registered at HMRC Land Registry. It is a registered UK property completely owned by you and the lease is protected the same as any other UK registered property. All of the incomes or rents derived are paid directly to you. These low risk yields are a steady 8-10% per annum, without any agents fees, tenancy issues or builders cost to deduct.