Asset Management Q&A
Question: As a commercial landlord we are increasingly seeing interest from our tenants for the installation of electric vehicle charging points. What are the issues that we should consider?
Answer: With the announcement that the sale of new conventional petrol and diesel cars will end by 2040, and an ever increasing focus on reducing emissions and using environmentally friendly alternatives, the installation of electric vehicle charging points (“EVCP”) is likely to be increasingly on the agenda for landlord and tenants.
The key points will depend on if the property is a multi-let estate or a single let building.
For a multi-let estate, with communal parking, the decision to install EVCPs may be led by a landlord’s desire to improve the amenity of the estate. The key points to consider are:
- Service Charge: is the cost of the plant, installation, repair, maintenance and all third party fees, as well as the electricity itself, fully recoverable from the tenants;
- Rights: do the occupational leases reserve sufficient rights to temporarily close, vary or even reduce the number of spaces in the car park to facilitate the installation; and
- Tax and grants: what tax benefits and other incentives are available. The government recently announced an extra £100 million in plug-in car grants.
For a single let building, with dedicated parking, the issue is likely to arise by way of a tenant application for a licence to alter. This should be dealt with in the usual way, but the key points to consider are:
- FRI: ensure that the EVCP will be caught by the tenant’s repairing and insuring responsibilities;
- Reinstatement and yield up: will the tenant be required to remove the ECVP at the end of the term, or is it preferable for it to remain in place;
- Rent Review: how the EVCP will be dealt with on review; and
- Tax: if capital allowances can be claimed if the EVCP is retained at the end of the term.
Other points to consider are:
- as with all works you must consider whether planning consent will be required;
- where the EVCP is leased, rather than purchased outright, security of tenure and the 1954 Act;
- if a wayleave is also required;
- the type and specification of equipment to be installed, as new technology can become outdated very quickly; and
- the Automated and Electric Vehicles Bill 2017 is currently passing through Parliament and may have implications on the provision of EVCPs. The progress of the Bill can be checked here.
Owen is a senior associate in our Commercial Real Estate team.