The increasing expansion of the UK’s electric vehicle (EV) charging infrastructure has created a significant growth of opportunities for the installation of EV charging points on commercial property leased to tenants. Although the government has been content to let the private sector drive the growth of EV infrastructure, there are minimum requirements for EV charging in new commercial buildings or those undergoing substantial renovation.
For EV charging, as with any other type of commercial leasing, it is always better to anticipate potential future areas of disagreement at the drafting stage, rather than trusting to litigation to sort them out after the event.
Who is to install the EV charging?
Different considerations arise for a landlord of a commercial building depending on whether it will be the landlord or the tenant who is installing the EV charging points.
Installation of EV charging points by the Landlord
The landlord gets to retain full control over the location and number of EV charging points and the level of power supply, the routing of apparatus and cables through its estate and ongoing maintenance.
However, the landlord will have had to ensure in advance that the occupational leases reserve the necessary rights for the landlord to install EV charging points by allowing closure of the car park or obstruction of access rights temporarily and also to ensure that any exclusive rights to park can be varied to enable use of EV charging facilities to be available to all tenants. The leases will also have to allow the landlord to create new rules governing the use of the parking bays enjoying EV charging.
Installation of EV charging points by a Tenant
A tenant may require EV charging for its fleet vehicles or, increasingly, as an expected convenience for its customers.
The tenant must be alive to the risk that the existence of EV charging apparatus could frustrate the tenant giving vacant possession at the end of its lease term, or on operation of an option to break, if the tenant is obliged, but unable, to facilitate removal.
For a landlord, does the tenant intend strip out EV charging apparatus which the landlord would prefer left in situ when the tenant vacates?
In such case, the landlord would not have a direct contractual relationship with the EV chargepoint operator, so the landlord would have to ensure there are obligations on the tenant to deal with the assignment or novation of the necessary agreements with the operator when the tenant vacates.
It may be to a landlord’s advantage to allow a tenant to have responsibility for the installation and maintenance of the EV charging points, but a landlord would be advised to involve itself with the electricity supplier and to reserve a right to approve the intended works and methodology, so that other tenants are not disadvantaged by any reduction in power capacity caused by the EV charging apparatus, and also to ensure that its building insurance would not be invalidated by the installation.
Consideration also needs to be given to ownership of any rights to the EV charging apparatus if the tenant’s lease is forfeited.
Financial considerations with EV Charging points
The nature of the commercial building may dictate the operating principles of the EV charging points. A shopping centre may benefit from having free to use, but slow, charging points which would encourage customers to remain shopping longer. Pay-per-use EV charging may be more appropriate for offices or residential developments.
A landlord is unlikely to be able to recover the high installation costs from the tenants under the service charge, but the operating costs may be recoverable depending on the drafting of the service charge provisions.
Planning Issues
Installation of EV charging points is development for planning purposes, so consideration is required as to whether a planning permission would be required, depending on the scale and location of the charging points, as well as other factors.
Conclusion
EV charging is a fast-developing field and potentially a lucrative revenue stream. The team at Weightmans has extensive experience in dealing with commercial leasing and can offer expert guidance on lease drafting to include electric vehicle charging provisions. Should you require assistance, please do contact us.
This insight is authored by Principal Associate, Alan Woodward. Alan.Woodward@weightmans.com
If you'd like further guidance on the topic, please contact our landlord and tenant solicitors.
