- Solar panels can increase home value in the long term, as renewable energy becomes more prevalent.
- Banks are providing funding for solar panel installations as part of a home loan application in 2023.
- The South African government has announced tax benefits for solar panel installations.
Eco-conscious homeowners keen to go green are likely to consider solar panels. They have many benefits, such as saving on electricity costs and reducing the impact of Eskom loadshedding.
And in 2023, solar panels become all the more appealing for homebuyers with a subsidy announced by the South African government, as well as banks providing funding for solar panel installation when granting home loans. More on that below.
Do solar panels increase home value?
Several studies show that solar panels increase the value of the property by 3 to 4%.
However, this is dependent on a number of factors:
- The size of the installation. This will be determined by how many solar panels your roof can hold, which will, in turn, affect how much you save on electricity.
- The quality of the panels will affect their lifespan.
- The warranty on the solar panels; they need to last a long time.
- The location of the property. This affects how much sunlight it is likely to receive.
Tax rebate for solar panels
Tax benefits announced by the South African government boost the value of solar panel installations.
The 2023 Budget Speech revealed plans by Minister of Finance Enoch Godongwana to introduce a tax incentive for the installation of rooftop solar panels. The key points were:
- As of 1 March 2023, individuals who install solar panels will be able to claim a rebate of 25% of the cost of the panels.
- Costs can be reclaimed up to a maximum of R15 000.
- The rebate is only available for one year and can be used to reduce tax liability in the 2023/24 tax year.
Another option: A loan from your bank
Many banks are doing their part by providing funding for solar panel installation in addition to financing a home purchase.
How much the bank will pay and when they will pay it varies between banks.
- Percentage of the property value: Some banks provide a percentage of the property value as a loan for solar installation, with a minimum and maximum loan amount.
- Loan-to-value ratio: The LTV ratio compares the amount of the mortgage to the appraised value of the property. For some banks, this value determines how much will be granted for solar panel installation.
- Solar quote required: Some banks will require a solar quote to be presented while others won’t.
- Access to funds: Banks vary as to when they will make the funds for the solar installation available.
A rundown of the different banks and what they offer
|First National Bank||RMB Private Bank||Standard Bank||Nedbank||ABSA|
|Loan limited to 15% of property value. Minimum loan of R50k||Loan limited to 15% of property value. Minimum loan of R50k||70% of funds can be paid to the solar installer||An increase to your home loan installments that will be offset by the reduction in electricity costs||An increase to your home loan installments that will be offset by the reduction in electricity costs|
|For LTV loans > 100%, maximum loan is R200k||For LTV loans > 100%, maximum loan is R200k|
|Solar quote not required, only estimated cost||Solar quote not required, only estimated cost||Solar quote required||Solar quote required||Solar quote required|
|Funds can be accessed on bond registration||Funds can be accessed on bond registration||Funds provided at bond registration||Funds will be paid once the solar installation is complete||Funds will be paid once the solar installation is complete|
With such options available, solar panel installation becomes a more valuable endeavor in 2023 than it was a year ago when homeowners were not yet acquiring solar panels in high numbers. That’s sure to change this year with the new tax subsidy and home loan options.
Bear in mind that ooba Home Loans can help you shop around for the best home loan package with the lowest interest rates. This, in addition to funding for solar panels, makes it a good time to explore the property market.
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