A new study addresses the subject, “Do solar home panels raise home rents in Australia?” – as well as by how much.
While much has been published (and probably overstated at times) about how solar panels improve property value in Australia, little has been written on how much they boost rental value in terms of what Australian renters pay.
Australian tenants are quite interested in living in a property that has a solar power system installed. According to research released earlier this year by The Australian Institute, two out of every three South Australian tenants do not have solar on their homes but would welcome their landlord adding it. 38 percent of those polled were prepared to contribute to the cost if it decreased their energy costs by at least the amount they donated to the solar system.
Recent research, conducted by Rohan Best, Senior Lecturer in the Department of Economics at Macquarie University in Sydney, investigated the association between solar panels and property rentals.
With an average rent increase of $19 per week and a payback period of around 5 years, the system would cost around $5,000 after subsidies.
So, what does $5,000 get you? In terms of how much tenants may save, a 5kW solar system installed in Brisbane could save roughly $1,200 per year on power bills. A bigger 6.6kW system might save renters roughly $1,500 per year.
Land Owners and Solar Home Incentives
Landlords can benefit from Australia’s solar rebate, and certain states have extra programs. For example, Victoria’s solar panel refund for rental homes provides an extra subsidy of up to $1,400, as well as the option of an interest-free loan. It’s important to note that both of these “rebates” are upfront discounts.
A rental house with solar home panels installed might appeal to more potential tenants — not that there appears to be a scarcity of renters in Australia right now. However, it may give a landlord a wider range of excellent renters.
To render a rental home even more appealing – especially in the case of bigger family homes – a 6.6kW solar home system is worth considering since it provides more bang for your buck and higher power bill savings. The most common system size at the moment, pricing in October revealed that a 6.6kW system was almost the same price as a 5kW system — the national average in October was $5,512.
However, much like with purchasing solar for an owner-occupied property, landlords should conduct extensive research before signing on the dotted line for a system to ensure they are obtaining a quality enhancement for their properties rather than future issues. Spending a little more on a high-quality system will help you get the most out of your solar home investment.