Installing a solar system on a rental property
If you are a landlord or a tenant you may both benefit from a solar system being installed on your rental property.
In certain circumstances, it’s possible to share the value of a solar system fairly between landlords and tenants. However, there are some things to look out for to have the best chance of enjoying the benefits of solar power.
Landlords and tenants can use the solar for rentals calculator to help work out if installing solar on a rental property is right for them.
Ultimately, the decision to install a solar system rests with the landlord as the owner of the property.
Suitable properties
Solar power typically works best on detached rental properties (such as houses, townhouses or duplexes) with a solid, sunny roof that can support a larger solar system of 5 kilowatts or greater.
Electricity bill savings for tenants are typically greatest where the tenant is home during the day to use as much of the solar power generated as possible.
Benefits for landlords and tenants
For landlords, having a solar system on your rental property can:
- make your property more appealing to prospective tenants
- increase property value
- provide a point of difference in the rental market.
For tenants, the main benefit is that you can get lower power bills during the term of your lease.
Landlords who install a solar system on their rental property can recover the installation costs through the rent paid for the property. If the rent goes up to cover these costs, the rent increase should be less than the amount the tenant saves on their power bill. Otherwise, the tenant will be worse off.
Solar for rentals calculator
The solar for rentals calculator can help both landlords and tenants work out if solar power is right for you.
Landlords
If you are a landlord, you can use the calculator to help you work out how long it would take to recover the cost of the solar system payback period taking into account the installation costs and rent revenue. It can also help you see how the rent paid for the property impacts the tenant benefit.
Tenants
If you are a tenant, you can use the calculator to estimate your power bill savings for different sized solar systems and at different rent levels.
Solar power consumption and feed-in-tariffs
When a property has solar power, tenants can benefit by:
- using the solar power in their home to reduce electricity bills
- selling unused solar power into the grid through a feed-in-tariff.
Generally, tenants can save more money on their electricity bills by using solar power in their home, rather than selling unused power through the feed-in-tariff. However, the feed-in-tariff will benefit tenants who aren’t home during the day to use their solar power, as it’s sold back into the grid when not being used.
The savings from solar power (including any feed-in tariff payment) are reflected in the tenant’s electricity bills.
Regional Queensland electricity customers
As set out in the Electricity Act 1994, customers of Ergon Energy can receive a feed-in tariff payment for any electricity generated by the solar system that they don’t use.
South East Queensland electricity customers
Tenants who live in South East Queensland can contact their electricity retailer to arrange a feed-in tariff.
Solar system costs and tax implications for landlords
The price of installing a solar system has an effect on how long it takes a landlord to recover their costs. When you’re planning to install a solar system at your rental property, you should get more than one quote and consider using an approved Clean Energy Council Approved Solar Retailer. A retailer should help you understand if your property is suitable for a solar system, the best system size and what the installation costs might be.
You may be able to claim depreciation on the cost of the solar system. Talk to your accountant about how a solar system at your rental property could affect your tax, or contact the Australian Taxation Office (ATO) for more information.
Solar system responsibilities
Landlords and tenants should make sure they understand their responsibilities.
Responsibilities may include:
- system installation (if a new system is being installed)
- payment of electricity bills
- changes in rent
- system maintenance
- access to solar monitoring data (if applicable).
Setting out these details when entering into a new tenancy agreement will ensure both parties are clear on the arrangements to avoid disputes later on. Residential tenancy agreements should always be made in writing and comply with Queensland residential tenancies legislation. Your property manager or the Rental Tenancies Authority can help you with this.
Solar system maintenance
Solar systems generally benefit from a clean and service every couple of years to keep them operating at their best. This maintenance should always be conducted by an appropriately qualified professional.
Landlords are typically responsible for fixing the system if anything goes wrong. If the system is not working properly, you should advise your property manager or landlord so they can fix it as soon as possible.
More information
Contact us
For more information phone 13 QGOV (13 74 68).