South Africa

Does solar make sense for SA landlords?

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Solar panels on roofs

Are solar power systems and other green upgrades worth investing in? A new survey suggests that they don’t help properties to sell, but there can still be big advantages for landlords.

In the FNB Estate Agents Survey for Q3 2023, 64% of agents said pre-installed backup energy systems aren’t important to prospective buyers. According to the survey, though, that isn’t because people don’t want them: 75% of agents have seen more properties installing backup electricity.

Rather, the lack of enthusiasm from buyers is because they prefer to install their own. Pre-existing solar installations may be out of warranty and can come with patchy cleaning and maintenance histories. To avoid this, tenants have the right to install backup electricity systems, but unless they agree an addendum with the landlord, any systems affixed to the home become the landlord’s property – making preinstalled systems a much safer option after all.

Long-term investments

Landlords who plan to hold their properties for the long term may also want to consider what the landscape will be like for energy-efficient upgrades in 10 years.

The need for energy-efficient and environmentally sustainable housing is only likely to grow. While some forecasters believe that load shedding could end next year, others say Eskom’s predictions are unrealistic and the company has routinely underperformed – and growing unpaid dues could make infrastructure upgrades difficult. Electricity is far from the only unreliable utility: Gauteng residents now also have to contend with “water shifting” due to shortages.

Regulations around green construction are also getting tougher. Major cities including Cape Town and Johannesburg have plans in place to decarbonise all new buildings, including residential. At the national level, the government is aiming to achieve net zero carbon emissions by 2050, and plans to use an escalating carbon tax to disincentivise emissions. If that goes ahead, energy-generating upgrades like solar panels could be worth their weight in gold to landlords and tenants.

Rental agents can help residential landlords to plan upgrades and keep their rental properties ahead of the curve, as well as flagging up the grants available to help them – such as tax rebates that can be claimed on solar panel installations until the end of next February.

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