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Green Building Bible, Fourth Edition
Green Building Bible, fourth edition (both books)
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    • CommentAuthorJeff B
    • CommentTimeNov 11th 2019
     
    I have been offered £11.5K to hand over the FIT payments from my solar PV system for the remainder of the 25 years (approx 17 years to run). Currently we receive approx £1500 p.a. in FIT payments (we are on the highest tariff as we installed very early on, in 2011), so potentially another £25.5K to come. My initial thought was I would be crazy to opt for this!

    However I will soon be 73 years old and would be looking to downsize, certainly in the next 5 years or so. In 5 years the FIT payments would amount to approx £7500 (approx £4K less than the offer). I am led to believe that having PV panels has little or no effect on prospective house buyers in terms of adding value to the house or increasing the "attractability", in which case why not go for the offer?

    Note: the buy-out scheme concerned is NOT one of those lease arrangements whereby the company concerned "owns" my roof - something I would definitely not be in favour of. An additional bonus is that they would maintain the system at no charge. Now I have Enecsys microinverters in my system which have proven to be quite problematic - about 7 of the original 21 have failed over the 8 years they have been installed. Getting replacements is difficult and expensive (the only stocks are in the USA) and to install them is quite expensive too (scaffolding etc). Another reason why the offer is very tempting and would be a selling point to the new owner. I don't think the company concerned knows much about microinverters (thankfully!), as the vast majority of installations would have a single large inverter - easy to understand and simple to change!

    I would be grateful for any comments.
    • CommentAuthorJeff B
    • CommentTimeNov 11th 2019 edited
     
    I should have added that I would still be able to use the electricity generated to run the washing machine or whatever else during the day. This is more or less the situation with folk who will install a PV system today - the FIT payments are minimal and presumably of secondary importance now?
    • CommentAuthortony
    • CommentTimeNov 12th 2019
     
    I had a similar offer but would get £33k so ain’t selling
    •  
      CommentAuthordjh
    • CommentTimeNov 12th 2019
     
    Posted By: Jeff BNow I have Enecsys microinverters in my system which have proven to be quite problematic - about 7 of the original 21 have failed over the 8 years they have been installed. Getting replacements is difficult and expensive (the only stocks are in the USA) and to install them is quite expensive too (scaffolding etc). Another reason why the offer is very tempting and would be a selling point to the new owner. I don't think the company concerned knows much about microinverters (thankfully!), as the vast majority of installations would have a single large inverter - easy to understand and simple to change!

    You'd want to be fairly sure that the contract was watertight enough to be sure they would maintain them. Also to have some sort of third-party warranty against the company going broke or otherwise walking away from the responsibility. Perhaps insurance-based with legal fees insured to sue them if necessary.
  1.  
    Sounds like a speculative low offer. £11.5k at your age would buy a lifetime annuity around £700 per year, much less than the FIT is worth, and FIT is tax-free. That's how the buyout company makes their money.

    (Obviously this is not qualified investment advice, depends on your circumstances, this is complicated, ask a grown-up to help, blah blah etc)

    Be very careful trying to sell your house if there is an ongoing liability to somebody else, eg for access to scaffold your roof. The buyer's solicitor and mortgage company will have to ask questions about this, that can raise doubts whether justified or not.

    We just got a good deal buying a house with a few 'non standard' aspects that had put other purchasers off, but will have the same issue if/when we sell. Agree that FIT and RHI and indeed EPC make little difference to the selling price.
    • CommentAuthorJeff B
    • CommentTimeNov 12th 2019
     
    Posted By: djh
    Posted By: Jeff BNow I have Enecsys microinverters in my system which have proven to be quite problematic - about 7 of the original 21 have failed over the 8 years they have been installed. Getting replacements is difficult and expensive (the only stocks are in the USA) and to install them is quite expensive too (scaffolding etc). Another reason why the offer is very tempting and would be a selling point to the new owner. I don't think the company concerned knows much about microinverters (thankfully!), as the vast majority of installations would have a single large inverter - easy to understand and simple to change!

    You'd want to be fairly sure that the contract was watertight enough to be sure they would maintain them. Also to have some sort of third-party warranty against the company going broke or otherwise walking away from the responsibility. Perhaps insurance-based with legal fees insured to sue them if necessary.


    djh - thanks. Yes, I have spoken to them about this. This was the response:

    With regards to the FiT’s these are held in an SPV (Special Purpose Vehicle) which is an investment vehicle which ring fences and houses all the income streams from each FiT we are the recipient of. The only expenses in this vehicle is the maintenance which is a small percentage of the total income generated . The likelihood of this SPV going into liquidation are remote.

    The management company that effectively manages the SPV could go into liquidation, if so the SPV would be managed by another management company BUT under the same terms of the agreement. Another scenario is that the SPV could be bought by another Investment company but again that would under the same terms as agreed.

    With regards to maintenance and monitoring, we are making you a lump sum payment upfront. It is imperative that we maintain and monitor the panels. If we did not and the PV system did not work/faulty/underperforming, we would not be earning the FiT and therefore our initial investment would not be recouped so we are extremely motivated to maintain your PV system.

    I have no idea what an SPV is, it sounds like a bit like a U.S. army vehicle. I'll be talking to my financial advisor shortly anyway so I'll ask him how this all works.
    • CommentAuthorJeff B
    • CommentTimeNov 12th 2019
     
    WillinAberdeen - thanks for your response. This is not a lease scheme, which as I said at the start I would never entertain. This is why I feel it might be attractive to a potential buyer. Although the new owner would not be getting the FIT payments they would be able to use the electricity that the panels generate plus they could "relax" in the knowledge that the system will be maintained at no charge to them. Obviously they need to grant access to an electrician if/when the need arose but they would have to do that anyway even if they were in receipt of the FIT payments.
    • CommentAuthorGreenPaddy
    • CommentTimeNov 13th 2019
     
    People get VERY jumpy when they are buying houses, and the least doubt will put them off. Access over land, shared boundaries, etc, etc. You yourself have uncertainties about this scheme, hence you are asking for thoughts on this forum.

    Imagine someone else buying your house, completely ignorant of the whole process, would have the same or more doubts, and won't be interested in SPV (special patrol vehicle - Captain Scarlet). They'll think "rent-a-roof", the message will get garbled as it to-and-fro's between sollicitors, even though this would appear not to be the lease type scheme, and walk away, or want to knock something off the price. Agree completely with WiA.
    • CommentAuthorphiledge
    • CommentTimeNov 13th 2019
     
    Are we missing something here as I dont see what the SPV has got to do with you, Jeff. What the FIT recipient does with the FIT payments is their concern. I dont understand why they are sharing that info and the bankrupcy scenarios with you??

    I suspect that if you sold the house the buyer's solicitor would want all sorts of indemnities and conditions writing into the sale contract which wont come cheap for anyone.

    Not being a fan of captain Scarlett I thought SPV was one of many gadgets to come out of Thunderbird 3's pod, but thanks to google I stand corrected.
    • CommentAuthorbxman
    • CommentTimeNov 13th 2019
     
    How you could think it a proposition amazes me

    You are entering a contract for the next 17 years .

    No way can you be sure you will be there for that period .

    The other party will quite rightly expect the contract to be honoured .

    You are jeopardising your prospect of being able to realise the correct market value for you property if you need to sell it during the fit period.

    get real please.
    • CommentAuthorJeff B
    • CommentTimeNov 14th 2019
     
    Posted By: philedgeAre we missing something here as I dont see what the SPV has got to do with you, Jeff. What the FIT recipient does with the FIT payments is their concern. I dont understand why they are sharing that info and the bankrupcy scenarios with you??

    I suspect that if you sold the house the buyer's solicitor would want all sorts of indemnities and conditions writing into the sale contract which wont come cheap for anyone.

    Not being a fan of captain Scarlett I thought SPV was one of many gadgets to come out of Thunderbird 3's pod, but thanks to google I stand corrected.


    They shared the info because I asked them the direct question - what if they go bust?
    • CommentAuthorJeff B
    • CommentTimeNov 14th 2019
     
    Posted By: bxmanHow you could think it a proposition amazes me

    You are entering a contract for the next 17 years .

    No way can you be sure you will be there for that period .

    The other party will quite rightly expect the contract to be honoured .

    You are jeopardising your prospect of being able to realise the correct market value for you property if you need to sell it during the fit period.

    get real please.


    bxman - thanks for your comments.

    This is why I asked for opinions! I'm not sure if you understand the situation though. I have 17 years worth of FIT payments to come. I am nearly 73 years old, so for a start it is not likely that I'll be around in 17 years. Apart from that I expect to move and downsize within the next 5 years anyway so I am not going to benefit from the 17 years worth of FIT payments. In the next 5 years the FIT payments will amount to £7.5K. The FIT purchase scheme will give me £11.5K immediately. The original investment on the PV system will have more than paid for itself in 5 years time.

    Are you saying then that my house should be worth an extra £18K because there could be 12 years of FIT payments left in 5 years time? If yes, I'm not sure that it's me that needs to get real!
    • CommentAuthorphiledge
    • CommentTimeNov 14th 2019
     
    <blockquote><cite>Posted By: Jeff B</cite>

    They shared the info because I asked them the direct question - what if they go bust?</blockquote>

    But the info you posted above seems only to relate to the FIT purchasers investment failing, it doesnt seem to cover who would take over maintenance responsibilities if the FIT purchaser went bust.

    If you think your likely to be selling up soon your probably best speaking to a conveyancing solicitor to see the impact any contractual tie might have
  2.  
    Posted By: philedgeBut the info you posted above seems only to relate to the FIT purchasers investment failing, it doesnt seem to cover who would take over maintenance responsibilities if the FIT purchaser went bust.

    If the FIT purchaser went bust I can see a couple of outcomes 1, the contract ceases and the FIT reverts to Jeff or 2 the contract is sold as part of the assets of the purchaser in which case the new contract 'owner' would be liable for the terms of the contract i.e. the maintenance. The contract would need to be read carefully to see what opportunities there are for the purchaser to vary the terms down the road i.e. wriggle out of their liabilities.

    Jeff - I can see the attraction of the scheme for you but I would agree the comments above about it being a problem when you come to sell. IMO the FIT payments (and the PV) won't add value to your property but presented properly would make your house more attractive compared to neighbouring properties whereas this sale of the FIT would make your house less attractive compared to neighbouring properties.
    • CommentAuthorbxman
    • CommentTimeNov 14th 2019
     
    Jeff

    If you are going to be selling your house before the end of the fit period the last thing in the world you want is to have a contract with anyone over any aspect of your property.

    The prospective owners will almost certainly be advised by a solicitor who will quite correctly make a meal of the position and probably advise against the purchase .


    I have to admit I was attracted to the 20 year warranty offered by Enecsys but fortunately thought better.

    You should look at

    https://www.navitron.org.uk/forum/index.php?topic=24760.0


    IMO if you have shading issues go for a Solar Edge system otherwise go for a straight string inverter .

    There are a number of good working S/H ones on Ebay most reasonably priced .


    Good luck cheers Patrick
    •  
      CommentAuthordjh
    • CommentTimeNov 14th 2019
     
    Note that the discussion on Navitron about 4-wire connections appears to be discussing something strange. Enphase mocroinverters for the UK use a three wire connection - brown, blue & yellow+green - in the normal way.
    • CommentAuthorJeff B
    • CommentTimeNov 14th 2019
     
    Thanks to all who contributed to this thread – this has been most useful.

    Phil – good point, I would need to check about the on-going maintenance in the event of the FIT owner going bust.

    Peter – I agree that having PV panels doesn’t necessarily add any monetary value to the property. That is at the moment of course, maybe with a more rapid shift to use of renewable energy people will become increasingly aware of these factors and what is unimportant to house buyers currently may become a big issue in the not too distant future. It always amazes me whenever I watch those “Moving to the country” type TV programmes (not very often I admit as the sums of money involved are usually way out of my league) that the energy requirement of the particular property is rarely, if ever, mentioned! Grand Designs is better in that regard.

    Patrick – yes, you certainly made the right decision re Enecsys micro inverters. I have learnt a great deal about these over the last 8 years! Going off-topic, I have found a reliable source in the USA and I can buy them at a fraction of the price that I paid when the system was first installed. I have four spares at home at the moment, just in case. The guy over there is very knowledgeable about them and apparently they are a great deal more sophisticated than I ever realised. The main problem in my case anyway is not so much any inherent failure in the inverters, but more to do with the atmosphere where we live. We are very near the west coast of Wales and every time I open the casing of a failed inverter it will have deposits of salt inside which have corroded the PCB. Whenever I change one now, I first open the case and apply a generous bead of a silicone/PTFE grease around the EDPM gasket and the same around the grommets where cables enter the unit.

    Interestingly the majority of the inverters are working ok and have done so since Day 1. It may be down to the seal and/or also where the units were made. It seems that production was moved around from the UK to Poland to China so that may be part of the problem. The initial specs were very high, almost to military standards I am led to believe, but this changed when they realised they were not making any profits!

    I have looked at Solar Edge and Enphase but as I am now contemplating downsizing in about 5 years time I don’t want to make any more big investments on the house, not least because my finance director won’t allow me to!
  3.  
    Purely out of curiosity - where does the company stand if you move out? Their contract is with you (not with the new owners of the house) so couldn't be enforced against a subsequent owner.

    Is there a clause that you'd have to repay them if you sold the house? Or do they put a burden in the title of the house that binds future owners?

    Where would they stand if you decided to remove the panels?
    • CommentAuthorJeff B
    • CommentTimeNov 15th 2019
     
    Posted By: WillInAberdeenPurely out of curiosity - where does the company stand if you move out? Their contract is with you (not with the new owners of the house) so couldn't be enforced against a subsequent owner.

    Is there a clause that you'd have to repay them if you sold the house? Or do they put a burden in the title of the house that binds future owners?

    Where would they stand if you decided to remove the panels?


    Will - thanks, some good points there! I'll put these plus some other thoughts back to them.
    • CommentAuthorJeff B
    • CommentTimeNov 15th 2019 edited
     
    I have thought of a couple more questions:

    1. Regarding Will's comment: What if the new owner removes the panels? At first I thought why would they do that but of course if a new roof was required they may not replace them. Without the benefit of FIT payments they may not bother to spend the necessary money to have the panels reinstalled.

    2. What if the existing microinverters become no longer available - would the company be prepared to change all 21 as it may not be possible to "mix and match" two different makes of microinverters?
  4.  
    Posted By: Jeff BWhat if the new owner removes the panels? At first I thought why would they do that but of course if a new roof was required they may not replace them. Without the benefit of FIT payments they may not bother to spend the necessary money to have the panels reinstalled.

    I suspect the contract would require that the PV remains on the roof. But the more important question raised above is how does the company ensure (force) subsequent owners honour the contract

    Posted By: Jeff B2. What if the existing microinverters become no longer available - would the company be prepared to change all 21 as it may not be possible to "mix and match" two different makes of microinverters?

    If they have a full repair contract they will have no choice but to repair the system but I suspect that the repair method would be up to them. Would it be an easy convert to go to a single inverter rather than 21 micro inverters?
    •  
      CommentAuthordjh
    • CommentTimeNov 15th 2019
     
    Posted By: Jeff BWhat if the existing microinverters become no longer available - would the company be prepared to change all 21 as it may not be possible to "mix and match" two different makes of microinverters?

    I don't think that is a problem, since the interconnection between microinverters is simply a mains cable. If it somehow was a problem then the solution would be to run an extra mains cable among the panels and join them before the lead down from the roof.
    • CommentAuthorCWatters
    • CommentTimeNov 15th 2019 edited
     
    How does a payment of £11k affect your entitlement to state benefits? Is it better to keep the FIT income yourself rather than have a cash lump sum?

    What about gifting ownership of the FIT to a child of grand child so they get the income for the remainder of the 25 years? If they put the money into a SIPP they would get another 20% = £300 a year from the taxman (even if they don't pay tax).

    or keep it yourself when you downsize and gift it in your will.
    • CommentAuthorJeff B
    • CommentTimeNov 25th 2019 edited
     
    Posted By: CWattersHow does a payment of £11k affect your entitlement to state benefits? Is it better to keep the FIT income yourself rather than have a cash lump sum?

    What about gifting ownership of the FIT to a child of grand child so they get the income for the remainder of the 25 years? If they put the money into a SIPP they would get another 20% = £300 a year from the taxman (even if they don't pay tax).

    or keep it yourself when you downsize and gift it in your will.


    Belated thanks for your comments. I had not thought about the state benefits aspect but as FIT payments are tax free I assume the buy-out scheme would be the same especially as I would only be realising a fraction of the amount that I would have earned over the remaining 15 years or so?

    Anyway all academic now as I have decided against going ahead with the scheme having taken advice from the folk on the forum. Even though it seems having PV panels per se is no great marketing advantage when it comes to selling a house, the promise of approx £1500 tax free income every year for the next 15 years may provide some additional incentive!
    • CommentAuthorCWatters
    • CommentTimeNov 25th 2019
     
    <blockquote>I had not thought about the state benefits aspect but as FIT payments are tax free I assume the buy-out scheme would be the same .. </blockquote>

    It may not apply to you but I was thinking of things like care costs. If you need to go into a care home the council will only pay once your assets have fallen below some value. There are also rules on giving away assets just before going into care. So you might be able to gift money to a grand child now that you can't later (without loosing care funding).

    Also worth making/reviewing your will as the tax rules on gifting things like pensions and houses and have changed in recent years. For example there are extra tax brakes for houses inherited by certain relatives - so it might be more tax efficient to give some relatives the house and others money rather than just equal splits of your estate. I'm not up to speed on the details.
    • CommentAuthorJeff B
    • CommentTimeNov 26th 2019
     
    CWatters - we do need to revise our wills as we had no grandchildren when we wrote them and now we have five! You are right about the house, there are some schemes for avoiding tax but I haven't a clue about them. Must add this to the ever growing "to do" list.
    • CommentAuthorphiledge
    • CommentTimeNov 26th 2019
     
    Take advice and certainly dont rely on what Im saying but as far as I know the following applies-

    Care costs- if youve got assests over £23k ish incl your house, then you pay care costs out of income/savings. The costs may be funded by the LA but will be recovered when your house gets sold. Main exception to this is if you are seriously ill and eligible for NHS continuing care when the NHS pays for your care. One thing to be aware of is the valuation of your assets is taken at the point when you know you will need care. This stops people disposing of assests between the time they get a diagnosis and the time they need care. An example is getting an early onset Alzheimer's diagnosis where you dont need care for several years to come. Your assests are valued at the time of diagnosis.

    Minimising Tax- inheritance tax allowance of around £325k per person is transferable to a spouse, so couple get a £650k allowance when the second spouse dies. Theres also a separate allowance for the main house of
    £150K per person again transferable to a spouse. This gives a total IHT allowance of £950k for a couple before IHT is payable.

    This my understanding of things but definitely get your own advice especially if your circumstances differ from those above.
  5.  
    What Phil said above is also my understanding - however

    You can put your house (and other assets) into a trust that will keep it out of the hands of the council for care costs but you can't do this before care is 'likely to be needed' or 'to avoid care costs' so it need to be done whilst you are in good health. I don't know the details but for his own reasons my brother has just done this. It might be worth taking advice in this direction if this appeals.
    • CommentAuthorJeff B
    • CommentTimeNov 27th 2019
     
    Philedge and Peter: thanks for your latest comments. Yes, I am aware of the care costs situation and the IHT rules. I don't think my kids need to worry about IHT as our assets are way off £650K! The trust "thing" is what I need to look into and is what I vaguely referred to in my last posting. As you say, professional advice definitely required!
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