Solar split incentive route chooser for landlords
You own the building and your tenant pays the electricity. Who should pay for solar, and who benefits? Answer five questions and see the ownership routes that usually fit, with the consents and tax points to check first.
Last updated 29 October 2026. Tax rows re-read against the sources below on 18 October 2026. Screening only, not advice.
Most advice on solar panels for commercial property is written for the occupier who wants a cheaper bill. A landlord, fund or managing agent has a different problem: the saving lands on someone else's account. The answer is almost never the panels. It is the structure: who owns the array, who buys the power, what the lease allows and who has to consent.
Four ways to structure solar on a let building
Who owns the array, who pays, and who benefits. The structure decides the return, not the panels.
Route chooser for the owner of a let building
Answer five questions. You get the ownership routes that usually fit, in order, with the consents and tax points to check. It is a screening tool, not advice.
What the chooser looks at
The five questions are the ones that decide the structure on a real building:
- The building. A single let, a multi-let building and a portfolio are different problems. A multi-let building has landlord-controlled common parts that solar can supply directly.
- Who pays for the electricity. If each tenant buys direct from a supplier, as under a typical full repairing and insuring lease, the landlord cannot capture the saving without a structure. If the landlord pays and recharges, owning the array is straightforward.
- How long you will hold and let. A roof lease or a PPA runs for years. A sale, a break clause or a lease end inside three years usually points to waiting.
- Capital. Funding it yourself keeps the return and the allowances. A roof lease puts no capital on the owner. A lender in the structure means consent is needed either way.
- The roof. Putting a 25-year array on a roof with under 10 years left is a false economy. Re-roofing and the array in one project is usually cheaper than stripping and refitting.
The six outcomes, and when each one fits
1. Fund it yourself (own the array)
This fits an owner-occupier, or a landlord who pays the electricity on a let building. You keep the generation, any export income and the capital allowances. Solar is special-rate plant, so the Annual Investment Allowance (£1 million) usually means 100% relief in year one for a business under the limit. Full expensing does not cover solar. See capital allowances on solar panels for owners and the HMRC Capital Allowances Manual CA22335.
2. Common-parts supply first
On a multi-let building the landlord already buys power for lifts, lighting, plant and the car park. Solar that offsets that supply has no split incentive at all, and it needs no tenant consent on consumption. Size the array to the landlord load, not the whole roof, and check how the landlord supply is metered. The mechanics are in common-parts and landlord supply and the multi-let metering guide.
3. Landlord-to-tenant PPA
Where the tenant buys its own power, the landlord can fund the array and sell the solar to the tenant below the grid price. The tenant has to agree, the supply and metering have to be set up, and the lease needs to outlast the PPA term. A green-lease addendum keeps the arrangement alive when the occupier changes. See landlord–tenant PPA and private wire.
4. Roof lease (sell the roof)
A developer funds, owns and maintains the array and pays roof rent; the owner commits no capital. A long lease is a registrable interest and normally needs lender and insurer consent. Stamp duty on the lease is SDLT in England, LBTT in Scotland and LTT in Wales, and the roof rent can carry VAT depending on how the lease is treated, so take advice. Reinstatement and removal terms matter as much as the rent. Read roof lease vs PPA vs licence and the lease clause checklist.
5. Green-lease cost sharing
A green-lease clause shares cost and benefit with the tenant, usually capped at the tenant's own saving, instead of recharging the capital cost. The Better Buildings Partnership publishes the standard drafting in its Green Lease Toolkit. See green leases and solar and the BBP clauses that matter for solar.
6. Fix the roof or wait for the lease event
A roof with under 10 years of life left, or a sale, break or renewal inside three years, usually makes the economics weak or the timing wrong. Re-roof and fit the array in one project, or time the work to the next lease renewal or rent review. The owner due-diligence guide sets out the order.
Why the service charge rarely carries the capital cost
The obvious lever for a landlord is the service charge, and it usually does not work. The RICS professional statement Service Charges in Commercial Property, 2nd edition, came into force on 31 December 2025 and applies to most managed commercial property in England and Wales. It treats the initial cost of new plant and improvements over the original specification as costs the landlord bears, unless the lease expressly allows recovery and the spend is justified. Buying a solar array is not a service, although operating and maintaining it may create a small recoverable element. The full reasoning, with the lease drafting traps, is in can a landlord recover solar costs through the service charge. That is why the chooser sends tenant-pays buildings towards a PPA, a capped green-lease contribution or roof rent, not a service-charge recharge.
Consents and tax points in one place
| Point | What to check | Source |
|---|---|---|
| Capital allowances | Solar is special-rate plant. AIA (£1 million) usually gives 100% in year one under the limit; 50% first-year allowance for companies on special-rate plant; solar is not covered by full expensing. | HMRC CA22335; gov.uk: first-year allowances |
| VAT | Ordinary commercial premises are standard-rated at 20%, normally recoverable by a VAT-registered business; 0% applies only to residential accommodation and buildings used solely for a relevant charitable purpose, to 31 March 2027. Roof rent: check the lease treatment. | VAT Notice 708/6 |
| Stamp duty on a roof lease | SDLT in England, LBTT in Scotland, LTT in Wales. Rates and thresholds differ by nation. | gov.uk SDLT; Revenue Scotland |
| Lender and insurer | A long roof lease is a registrable interest and usually needs lender consent; tell the insurer, especially where storage is involved. | Owner due diligence |
| Service charge | Capital cost of new plant is generally a landlord cost under the RICS 2nd edition standard unless the lease allows it. | Service-charge guide |
| EPC and MEES | EPC E is the binding minimum today for let non-domestic buildings. EPC B by 2031 is a proposal for privately rented buildings over 1,000 m², set out in the June 2026 interim response and not yet law. | DESNZ interim response |
What this tool does not do
It does not price a project, size an array or give legal or tax advice. It cannot see your lease. It narrows the structure so the conversation with your solicitor, accountant and an installer starts in the right place. For cost bands and payback, use the cost guide and the calculator; for how the allowances and income fit together, the funding and tax page. This site is an independent guide published by SEO Dons Ltd. It is not an installer. If you send your answers, we reply by email.