The future of transport is electric. With the UK Government banning the sale of new diesel and petrol engined cars and vans from 2030, the challenge is on to build the necessary infrastructure for that low-carbon future. So what are the key considerations for the tourism and leisure industry and what are the property issues that need to be addressed?
Capacity
EV charge points need electricity. Depending on the number of spaces, and the proposed speed of charging, that may mean new connections, substations and cables. So the first step is to consider your likely requirements, your available capacity and any associated infrastructure works.
Commercial models
The EV charging market is still developing, and there are a number of providers to choose from. The simplest route is to pay for the installation and appoint a provider to carry out the necessary operation and maintenance services and provide the back-office functions. That approach can allow more flexibility in the charging structure (e.g. you might want to allow free or cheap charging to promote linger time).
But there are developing commercial models, where EV charging providers meet the cost of the installation in return for a guaranteed operating period. But these deals are more complex, and funded arrangements are likely to require some form of property security (most likely a lease with associated easements and property rights for cables and substations).
Granting any property right needs careful consideration. Take advice before signing heads of terms, exclusivity agreements or formal options. The consent of any lender or superior landlord may also be required in order to enter such arrangements. As this remains a relatively new area, be sure to engage all parties at an early stage.
With any commercial deal, the provider should have the obligation to install the EV chargepoint and any necessary infrastructure. It is important to clarify who obtains the necessary consents, and who is responsible for the power supply (including the cost of any necessary connection works). When negotiating terms be sure to consider the rent, potential revenue streams and (if applicable) how any turnover rents are intended to be calculated. Turnover rent is where a tenant pays a percentage of the turnover rather than or in addition to a fixed monthly or annual fee to the landlord. You will need to satisfy yourself you are happy with how the provider intends to calculate the turnover rent and how it is paid to you. Turnover rents can be difficult to interpret so ensure the mechanism is transparent and understood from the outset.
It is also important to consider the repairing, maintenance and insurance obligations (and the extent to which the landlord is required to provide any ongoing services), responsibility for business rates, and with the obligations to reinstate the site at the end of the lease term. Other points that should be discussed include advertising rights, health and safety and parking enforcement. Some providers also request an exclusion zone within which only the charging provider can provide apparatus - to provide exclusivity, so be sure this is dealt with clearly during your negotiations. If entering into a longer arrangement, landlords will want a guarantee that the charge point will operate throughout the term. Discuss with the provider what assurances can be provided in the documentation to avoid problems with operators and stranded assets meaning customers cannot charge.
Depending on the site, agreement will be needed on the number of parking spaces which will serve as charge points and those which are also available for general parking.
Site owners and operators may be liable for assessing and managing the health and safety risks arising out of the installation and use of the charging points.
Cables
When installing EV charge points, the route of cables should be a key consideration. This will have a real impact on what infrastructure can be provided in car parking spaces over the long term, and the associated installation costs. Cable routing should be addressed at an early stage of negotiations, and any easement strips clearly noted on the lease plans. It is important to think about future use of the site, particularly if property rights are required for new substations or utility connections.
Planning
There are permitted development rights for charge points in public and private car parks – subject to conditions, but planning permission may be required elsewhere.
Chargepoint leases usually contain provisions that the parties shall not object to any application to use the property as a chargepoint.
The National Planning Policy Framework includes requirements for new developments and changes of use to be designed to enable charging of plug-in and ultra-low emission vehicle in safe, accessible and convenient locations. At a local level, local policies and plans are expected to take this further.
Legislation is on the way to update Building Regulations which will require the installation of charging infrastructure in new buildings and buildings that are undergoing material change in use or major renovation. In addition, the government is set to introduce its legislation on smart charging. With new legislation on the way, landlords should consider EV requirements going forward.
Next steps
The Competition and Markets Authority has recently stated that charging can sometimes be difficult and frustrating for drivers, which could stop people switching to EVs. Concerns about the reliability of charging points, difficulties in comparing prices and paying for charging, risk reducing people’s confidence and trust. London has the highest density of chargers in the country, ahead of all other regions. If we are to facilitate adoption and achieve government aims the availability of charging infrastructure beyond major cities does need to be looked at with greater urgency.
Should you be considering expanding your EV chargepoint offering, we suggest the following points be considered at early stages:
- Get advice on capacity;
- Carefully review any heads of terms or exclusivity agreements;
- Identify the need for planning permission and third party consents;
- Consider the level of control you need on the service and charging structure;
- Take early advice on any commercial deals or lease based models;
With the take up of electric vehicles on the rise, the availability of convenient and fast charging will start to become a key factor for the tourism and leisure market. Make sure you don't get left behind.
