The pitch for solar sounds simple: At a time when electricity bills are skyrocketing, installing solar panels can cut your utility costs and guarantee a low, fixed rate for green energy. When sold, panels can increase a home’s value by 5 to 10 percent.
The only problem? Many homeowners with solar do not actually own their panels. Instead, they lease them. Lease terms can last up to 25 years and come with onerous monthly payments, annual markups and high upfront purchase prices – they are a liability, not an asset.
Homeowners who sign this type of agreement often assume that if they sell the home before the lease ends, the buyer will take over the payments. But the reality is more complicated: Buyers may have a hard time qualifying for long-term obligations beyond the mortgage, or simply refuse to accept a hefty contract they had no part in signing.
As buyers take hold in many parts of the country, real estate agents say solar leases have become a common sticking point in negotiations that can end up causing sellers to pay off their contracts early, often for tens of thousands of dollars, to keep buyers from walking away.
“When you sell a house, if you don’t pay off the system, then the buyer has to qualify not just to buy the house but to qualify for a lease,” said John Bulik, a real estate agent in Denver’s western suburbs. “It may weed out some potential buyers and we’re seeing a lot of buyers who don’t want to go through that hassle.”
Read more: Seller Disclosure: How It Affects Home Sellers and Buyers
Residential solar has exploded in popularity over the past two decades due to growing interest in green energy, high electricity prices, tax incentives and technological advances that make panels cheaper and more efficient. Nationally, about 8% of homes now have solar power (the number is much higher in sunnier states like Hawaii, California, and Arizona), making dotted panel roofs increasingly common in listing photos.
Although prices have dropped over the years, solar is still a big investment: Tesla puts average system costs at $21,900 to $26,400 by 2025.
Leasing eliminates these upfront costs and relieves homeowners of the maintenance hassles that come with owning the panels outright. The trade-off, in addition to potential home-selling complications, is that they tend to end up paying more due to mutual contract terms that increase payments each year, and their energy savings diminish over time.
Despite its drawbacks, leasing has become increasingly popular in recent years. As of mid-2024, about 36% of residential solar projects are leased or under similar leasing arrangements called power purchase agreements, up from 22% three years ago, according to solar research firm Ohm Analytics.
Aerial view of homes, many equipped with solar panels, in Fontana, California, on September 17, 2025. (Photo by Mario Tama/Getty Images) ·Mario Tama via Getty Images
The 30% tax credit for purchasing clean energy is set to expire at the end of 2025, and while different business tax credits for companies offering leasing and power purchase agreements remain in effect, leasing is likely to become more popular this year. The tax changes have many solar companies scrambling to adapt their business models.
“I think this will definitely drive the industry as a whole, which is solar installers and financing companies, to introduce more lease and PPA products,” said Vikram Aggarwal, founder and former CEO of EnergySage, a solar comparison shopping marketplace.
However, Agarwal said he believed most customers would not sign a lease if they fully understood the implications.
When San Jose, Calif., broker Kip Barnard works with a solar panel seller, his first step is figuring out whether the system will be owned or leased. He said if it was leased he would be “cautious” in explaining how the contracts could complicate a sale. In the hot market of Silicon Valley, buyers often end up assuming the lease. But he called the entire process — marketing the system, transferring leases and handling buyer-seller negotiations — “a challenge.”
“I think what they’re selling sounds good,” Barnard said of sellers with rental systems. In many cases, homeowners may be misled by salespeople who tout the home equity benefits of solar while hiding the fact that leasing is a liability. “I’ve never met a buyer who was so excited about receiving a lease from someone else.”
Also read: 8 tax deductions for homeowners
When Josie Williams and her husband were house-hunting in Gun Barrel City, Texas, a small town outside of Dallas, they loved a four-bedroom, two-bathroom home with an open floor plan, a short commute to the pest control company where they worked, and plenty of yard space around the corner for their young daughter to play. The only problem? The homeowner owes more than $60,000 on the house’s solar panels and is looking for a buyer willing to shoulder the payment.
Williams, 33, knew little about solar, and her agent encouraged her to delve into the details of the contract. They discovered that while the home had no electricity bill, she and her husband would have to pay $291 a month for the panels for the next 20 years. The price seemed high and they were worried the additional obligations might slow down their equity building.
They try to negotiate a lower offer that reflects the panel’s responsibility, or a deal in which the seller will reimburse the cost of the system. When they were rejected, they walked away.
“The idea is that if you have a similar loan, it’s not someone else’s responsibility to come in and pay those fees,” Williams said.
So what’s a homeowner to do? At a time when electricity costs are rising rapidly, agents and experts who spoke to Yahoo Finance said they believe solar panels can still be a valuable and cost-saving addition to a home, as long as they have one. An analysis of 2025 Zillow data by comparison website SolarReviews found that homes with solar installed were 6.9% more expensive than homes without solar.
In Colorado, Xcel Energy, the utility company in much of Denver, has been raising rates significantly in recent years and is seeking another 10% increase this year. Nationwide, energy bills are rising much faster than overall inflation. Blick, who installed solar on his home about eight years ago, said these trends can make solar energy a long-term investment.
“Even if the tax incentives go away, it starts to make buying more attractive,” Blick said.
Claire Boston is a senior reporter at Yahoo Finance, covering housing, mortgages and home insurance.
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