Solar panels are often promoted as a way to reduce utility bills and increase home values by 5% to 10%. However, many homeowners do not own their panels but lease them instead. These leases can last up to 25 years and involve monthly payments, annual increases, and high early-purchase costs.
Homeowners who sign lease agreements typically expect buyers to take over payments if they sell before the lease ends. Yet buyers may find it difficult to qualify for this additional long-term liability alongside a mortgage, or they may simply reject assuming a contract they did not sign.
Real estate agents report that solar leases have become a common obstacle in negotiations, particularly as buyers gain leverage in many markets. Sellers often end up paying off their contracts early, sometimes spending tens of thousands of dollars, to prevent buyers from walking away.
"When you go to sell the house, if you don't pay off this system, the buyer has to qualify not just for buying the house, but also for this lease," said John Bulik, a real estate agent in the western suburbs of Denver. "It can knock out some potential buyers, and we see a lot of buyers not wanting to go through that hassle."
Residential solar installations have grown significantly over the past two decades, driven by interest in green energy, high electricity prices, tax incentives, and improved technology. About 8% of homes nationwide now have solar panels, with higher rates in states like Hawaii, California, and Arizona.
While solar panel costs have decreased, an average system still ranges from $21,900 to $26,400, according to Tesla's 2025 estimate. Leasing eliminates upfront expenses and maintenance responsibilities for homeowners. However, leases often include clauses that increase payments annually, reducing energy savings over time and creating complications during home sales.
Leases have become more popular in recent years. By mid-2024, approximately 36% of residential solar projects involved leases or similar power purchase agreements, up from 22% three years earlier, solar research firm Ohm Analytics reported.
Lease popularity may increase further after a 30% tax credit for purchasing clean energy expired at the end of 2025. A separate commercial tax credit for companies offering leases and power purchase agreements remains available, leading many solar companies to adjust their business models.
"I think it is definitely pushing the industry, i.e., the solar installers and financing companies, to come up with more lease and PPA products," said Vikram Aggarwal, founder and former CEO of EnergySage, a solar comparison-shopping marketplace. Aggarwal added that he believes most customers would not choose leases if they fully understood the implications.
Kip Barnard, a real estate agent in San Jose, California, said one of his first steps with sellers who have solar panels is determining whether the system is owned or leased. For leased systems, he explains how contracts can complicate sales. In Silicon Valley's competitive market, buyers usually assume leases eventually, but Barnard described the process of marketing the system, transferring the lease, and negotiating as "a challenge."
"I think they're being sold a product that sounds good," Barnard said of sellers with leased systems. He noted that homeowners may have been misled by salespeople emphasizing solar's home-equity benefits while downplaying lease liabilities. "I've never met a buyer that's thrilled about picking up somebody else's lease."
Josie Williams and her husband considered purchasing a four-bedroom home in Gun Barrel City, Texas, but discovered the seller owed over $60,000 on solar panels and wanted buyers to assume payments. Williams, 33, learned she would pay $291 monthly for the panels for twenty years, despite having no electric bill. She worried this obligation would hinder equity building.
The couple attempted to negotiate a lower offer or have the seller pay off the system. When negotiations failed, they walked away from the purchase. "My thought process was, if you have loans on something like that, it's not someone else's responsibility to come in and pay for those," Williams said.
Real estate agents and experts told Yahoo Finance that owned solar panels can still be valuable and cost-saving additions to homes, especially as electricity costs rise. An analysis of 2025 Zillow data by SolarReviews found homes with solar sold for a 6.9% premium over those without.
In Colorado, Xcel Energy has raised rates aggressively in recent years and seeks another 10% increase this year. Nationally, energy bills have risen faster than overall inflation. John Bulik, who installed solar on his home eight years ago, said these trends make owned solar a sensible long-term investment. "It makes buying start to look attractive again, even with the tax incentives gone," Bulik said.