Leases for electric vehicle (EV) charging points – legal points to consider
As we move into the EV era, it is impossible to miss the influx of EV charging points appearing in both public and private locations. The government’s aim is to remove charging infrastructure as a perceived barrier to the adoption of EVs as they offer vehicle chargepoint and infrastructure grants to help achieve their goal – Electric vehicle chargepoint and infrastructure grants for landlords: Eligibility – GOV.UK (www.gov.uk) As the electric revolution gathers pace, businesses, employers and property developers will need to remain ahead of the game to capitalise on this growing market and to ensure that supply meets demand.
EV charging point providers require a lease from the site owner before installation of any equipment (EVCP Lease). There are several points that all site owners should consider before granting an EVCP Lease. These are discussed below.
Location of EV charging points and related infrastructure
Title investigation will need to be conducted to ascertain ownership of:
- the areas where the EV charging points are to be installed; and
- the location of the associated infrastructure (cables, wires, substations etc).
Any restrictions on the title(s) preventing the installation of EV charging points or related infrastructure will need to be addressed. If the required land does not fall entirely within the ownership of the site owner, then third-party consents / superior landlord consents will be required, and where the land is charged bank consent will also be needed. The same considerations apply where a new electricity substation is required to power the EV charging points. An electricity company would want a 99-year lease or even the freehold of the substation site. These will have a time and cost implication for the project.
Future development plans
The existence of the EV charging points, and any substations could potentially hinder any future development plans for the site. Site owners can seek to protect their position with the inclusion of “lift and shift” provisions in the EVCP Leases and any substation leases but, even where they are accepted, in practice these clauses can be very expensive to implement.
The problem will be exacerbated if the tenant or the equipment owner can claim security of tenure under The Landlord and Tenant Act 1954.
The site owner will need to conduct due diligence on the EVCP Lease tenant entity and any superior landlord may also want comfort that the tenant entity can fulfil their obligations under the EVCP Lease before issuing consent. What happens if the tenant is a SPV? A site owner may consider seeking a guarantee from a parent company.
Repair of the EV charging points and infrastructure
The responsibility for:
- the repair and insurance of the EV charging points and related infrastructure during the term; and
- reinstatement at the end of the term,
must be clearly set out in the EVCP Lease. What happens if the tenant vacates and fails to comply with their repair obligations? A site owner may wish to protect their position by seeking a remediation bond to help cover possible remediation costs.
How is the rent under the EVCP Lease to be calculated? Will the rent be a fixed sum or linked to the tenant’s profits? Advice from a surveyor will be necessary to ensure that the site owner gets the best deal possible. Aside from rent, consideration should be given to service charge. Will the tenant be obliged to contribute towards the service charge and what services will the tenant require the benefit of? Thought also needs to be given to rental and service charge payments during the construction phase. Will there be a concession?
Where appropriate, the site owner may also need to consider the impact on its rent and future rent reviews following the installation of an EV charge points.
Existing car parking rights
It may be necessary to reach agreement on the number of parking spaces which will serve as “dedicated” charge points and those which are also available for general parking, but not charging. Will the existing parking structure on the estate need to be revisited?
Where planning permission is required who will be responsible for obtaining this and the associated costs? Where this is the tenant responsibility, the tenant may require an agreement for lease conditional on obtaining planning permission and site owners may want the ability to veto any unfavourable planning conditions.
An electric grid connection is fundamental. This can be an expensive process and the connection is personal to the applicant, which is usually the tenant. If the EVCP Lease terminates the connection will not automatically revert to the site owner.