A friend was telling me that he's been quoted £10.3k for a 3.36kwp system for the roof of a rental property hehe owns. The anticipated return from the FIT is about £1.2k which will give a return around 12%. The tenant will also get the benfit of some free elctricity while the sun is out.

Then someone said that the FIT is only for demestic situations i.e. on your own roof. Is this right? What are the rules in this situation? He had it in mind mind to put them on all my rental property as money is cheap at the moment and with such a high return on the investment it's a bit of a no brainer?

Even if it was taxed it is still a no brainer!

40% tax , you must be doing well ST ( or not depending on ones outlook )

Posted By: CWatters

It will be up to landlords and tenants of domestic or commercial property to come to an arrangement about the receipt of payments and on-site electricity use benefits."

Not a very helpful answer from them. That much is obvious but will the electric company make a FIT payment to the landlord or insist on paying the person that has responsibilty for the elctricity supply contract at the house (eg the tennant)?

All the rent-a-roof companies are collecting the FIT income, even though someone else owns/pays the electricity bill. Don't see why it shouldn't be equally possible here.

CWatters, as I am demonstrating for myself the recipient of the FiT can be entirely unrelated to the householder and to the owner of the equipment.

For solar not on my own roof my company is the FiT recipent. In that case the retail electricity supplier is the same as the one paying the FiTs. In another case which I hope will actually bloody happen before I get old and die, the FiTs are coming to me and from an electricity retailer that is different from that the householder is paying for supply.

Rgds

Damon

Posted By: SteamyTeaInvest 10K for 25 years, get a return of 12%, or 1200 a year, take of tax at 40%, that leaves 720 per year, but then you have to take off another 10000/25 or 400 for depreciation, leaving you with 320 for a ten thousand investment. That is 3.2 percent, not really very good as Northern Rock are offering that (and you can get your 10k back as well).

Can't quite get my tiny brain round it all exactly but I think the fact that the FIT payments are index linked changes the sums quite a bit.

I don't quite understand your taking off of 40% tax. Presumably this refers to income tax, but FIT payments aren't counted for income tax purposes as standard. If the payments are made to a company then I think the story will presumably be different and the companies profits would be taxed at whatever rate they're taxed at, including the FIT income, the same as any other income, but I don't think there'd be anything to stop this person assigning the FIT payments to them personally rather than the company providing they'd paid for the panels out of their personal bank account... but I'm not an accountant, so could be wrong.

either way, presumably northern rock interest is taxable both for income tax and corporation tax.

in reality?

looks more like an opinion based on some fairly dubious assumptions rather than reality to me.

I'd expect there will be a pretty healthy market for second hand PV panels in 25 years time, once the FIT's ended, any spark will be able to fit either new or second hand systems with no MCS - or more to the point, any DIYer will be able to fit them if they want and just get a spark to do the wiring / testing and submit the G83 / 1 notification (2 sides A4). The electricity price itself will be the incentive by then, and a 25 year old panel probably operating at 90% or more of it's originally efficiency is going to be worth something.

But in the vast majority of situations I'm not talking about resale value, I'm talking about the value to the customer of leaving on the roof something that will still be producing thousands of KWh per year, and knocking hundreds of pounds in todays money, or probably over a thousand pounds after 25 years of energy price inflation off their electricity bill each year. Valuing this at zero would seem hard to justify to me.

A house rental companies overheads will be there regardless of whether they install panels on the roof or not, with the only direct overheads potentially relating to the need to send in a meter reading once a quarter, and possibly to clean the panels every few years (or more/less often if they choose to), plus a few lines in the accounts. All other overheads would still be there for any other type of investment, and for a landlord, and investment in PV on their existing housing stock would create far lower additional overheads than the alternative investment in additional housing stock to manage, which would also be lucky to generate anything like rates of returns that PV can generate at the moment.

on the tax thing, thinking about it, most small time landlords are probably sole traders, meaning they don't pay corporation tax, so there should be no tax payable on their FIT income as it's not counted for income tax purposes.

Posted By: SteamyTeaAs for bills going up, so will wages, they tend to equal out, especially over 25 years. I think we are paying less for our fuel now than we where 25 years ago as a fraction of our wage.

anyone thinking that the last 25 years of energy price performance has any relation to the next 25 years is in for a nasty shock given that the first 15 of the last 25 years saw a vast increase in relatively cheap to extract and deliver north sea gas output, and a massive move towards the use of high efficiency gas turbines for electricity production using that north sea gas.

Try the last 5 or 10 years when north sea gas production has been dropping rapidly, and we've been increasingly reliant on imported gas which we have to compete for on the international market, resulting in a 75% rise in energy prices over the last 5 years. This is only going to continue, particularly so as the government has spent the last 20 years pissing about and investing all it's hopes in the wrong technologies, and I don't think there's that many jobs outside professional footballers and maybe doctors that have had anything like a 75% rise in pay rates in that time, and certainly the average was around 4% a year before the recession hit, and a lot less since.

eta - actually, thinking about it, I suppose if this is a rental property then the benefit of the reduced electricity bills won't directly go to the landlord, but could potentially be at least partially recouped from increased rental to reflect the lower electricity bills. I'd expect that this will evolve into a similar situation to double glazing over the next 25 years, where it basically becomes the norm, and landlords trying to rent properties without it will have a harder time renting them out, and will end up having to charge lower rents to tempt tenants to rent from them, rather than landlords with PV specifically jacking up prices. This is conjecture, but there are enough examples of this to make it a fairly safe bet (loft insulation, cavity wall, combi boiler, double glazing etc).