Following the announcement of the government's EV infrastructure strategy in March 2022, the UK EV market has grown significantly. Statistics show there are an estimated 477,000 electric cars on the road in the UK and more than 790,000 plug-in hybrids. The growth of the EV market is expected to accelerate in the coming years as the UK prepares for the 2030 ban on new petrol and diesel vehicle sales (Source: DfT, SMMT).
This article deals with general property considerations and some lease drafting points for lawyers acting for Electric Vehicle Charging Point ("EVCP") operators and landowners.
Practical Considerations
Land ownership
Consider who owns and occupies the land upon which the EV infrastructure will be installed, and who will retain ownership and responsibility of the equipment once it is installed. EVCP operators ordinarily own the equipment, but not always.
Electricity supply
Before any works commence, the EVCP operator needs to consider whether the existing electricity supply is sufficient for the EV charging infrastructure requirements, or whether additional infrastructure be required such as an electricity substation, secure a point of connection and consider who will pay for it and whose it is if the deal does not go through. The EV operator would need to contact the Distribution Network Operator to understand their requirements at the early stages of negotiations. Renewable energy alternatives (such as rooftop solar panels) which could provide alternate power supplies to the equipment may also be considered.
Planning permission and Building regulations
The installation of EV charging points is considered 'development' under the Town and Country Planning Act 1990 and therefore requires planning permission. However, under general permitted development rights, planning permission is not required for the installation of wall mounted electrical outlets or upstanding EV charge points, provided safety conditions are met and there is no Article 4 direction removing general permitted development rights.
Initial costs
There are several government grants and incentives available to cover installation and other costs. Most EVCP operators will offer to meet all installation costs as an incentive for landowners to install EV charge points on their land, in return for the operator receiving the income from the EV charging point.
Additional property documents
The landlord may require consents from existing utility providers to install the EV charging points' associated cabling and other infrastructure. If cabling needs to run through neighbouring land, the landowner will require an easement from those landowners.
Where the land is mortgaged, the landowner will need the consent of the lender. Consent will also be required from the superior landlord (where applicable).
Title and property due diligence
Title restrictions (such as restrictive covenants), rights (such as access or services) on neighbouring properties and third-party occupational interests, may impact or prevent the proposed installation of chargers.
Existing leases
If the affected land is subject to a lease, then a licence, surrender and/or variation may be needed to allow access for repair, maintenance, operation, use the EV charger and to reserve rights for third parties (whether occupiers of a building on the land or members of the public generally) to use the EV charger once installed.
Buildings insurance
Consider whether the installation of EV charge points will impact the buildings insurance policy or any other policies already in place, such as public and employer's liability insurance.
Lease to an EV operator: Drafting points for consideration
Extent
Consider what land is being leased. Is it just the charging stations (with or without the parking space) or an entire service station?
Lease term
This is generally for the lifespan of the infrastructure, which varies between 10 and 15 years.
Head Lease
If there is a head lease, a covenant should be included in the lease requiring the EVCP operator not to do anything that might cause the Landlord to be in breach of its obligations as the tenant under that head lease.
Rent
Establishing the profit generating return for the landlord is a key part of any lease negotiation, but EV leases often operate on a 'hybrid' (if you'll pardon the pun) basis. Rather than an outright fixed rent which might be disproportionate to the area of land actually comprised in the lease, the EVCP operator usually pays a base rent per installed charging point. A performance-based top up based on the usage of the equipment itself or turnover rent (see below) then supplements this.
Turn over (performance) rent
Except where the operator is leasing an entire forecourt area, it is common for an additional rent to be payable, based on a percentage of net profit earned at the 'pump' as it were. The rate of return may depend on a number of factors and where this kind of structure is proposed, professional advice on likely returns will be needed.
Rent reviews
Consider whether the base rent should be subject to annual RPI linked increases and/or Open Market Value reviews.
Repair obligations
The EV operator will be required to undertake general repair and maintenance works to the charging infrastructure and to ensure that any equipment is operating in a safe manner in compliance with all regulatory requirements.
Consider if it should include a positive obligation to keep the equipment in good repair and working order, especially if the Landowner's intention is one for green credentials.
Yielding up
Consider whether the EV operator will remove the charging infrastructure at the end of the term, or whether the landlord could purchase it and remain in situ at expiry or termination. The operator may prefer to leave the charging infrastructure in place as it may not be cost effective to remove the infrastructure. In any event, the parties will need to consider how extensive reinstatement obligations need to be. It is likely to be impractical (and expensive) to remove underground cabling, so it is better to agree a required reinstatement programme before the lease is entered into so neither party is in any doubt as to what is required on termination of the lease.
The equipment may be subject to finance so will have to be removed.
Rights
The EVCP operator will need rights to install, connect, operate and maintain the charging infrastructure.
The EVCP operator may require a right to park vehicles when not charging. It is necessary to reach an agreement on the number of parking spaces that will serve as dedicated charging points and those which are available for general parking, but not charging.
There may also be rights to access other areas of the retained land to repair and maintain the charging points. Consider whether third party occupiers have responsibility for access to the wider site and whether special arrangements to facilitate hours of access will be required.
Outgoings
The EVCP operator is expected to pay all outgoings in respect of the EVCP infrastructure.
The lease should also deal with costs of any upgrades to the EVCP infrastructure that may be required in the future due to advances in technology, such as a renewable charging output.
Service charges
The installation of EVCP infrastructure on an estate may have an impact on the service charge and the services offered by the landlord. The landlord would need to consider whether existing occupational leases have sufficient flexibility to vary either the service charge or services offered. In addition, where infrastructure is being placed on the common parts of an estate you need to ensure that the landlord has adequate rights under the terms of any other leases. This will include having sufficient retained powers in order to go on and reconfigure the common parts to allow the construction of the EVCP infrastructure and make parking available for the use of the operator.
Planning and wayleaves
The EVCP operator may seek to prevent the landlord from objecting to planning applications by the EVCP operator which relate to the permitted use. The landlord may be required to enter into any further wayleaves required subject to the EVCP operator paying the landlord's costs.
Insurance
Consider whether the EVCP operator should be obliged to insure the charging infrastructure for damage caused by a list of agreed insured risks or whether the operator should only be required to insure for third party and public liability insurance. If a performance rent is payable, then the landlord should require the charging infrastructure to be fully insured to minimise any periods of down time.
Forfeiture
The landlord should have the right to bring the lease to an end if the EVCP operator goes into liquidation or the material obligations in the lease are not complied with. This clause must accord with the forfeiture clauses in the superior lease.
Security of tenure
The lease should be excluded from the security of tenure provisions of the Landlord and Tenant Act 1954. This is standard practice within the market for a lease of electric vehicle charging infrastructure.
Exclusivity and pre-emption rights
The EVCP operator may require a right of exclusivity over the landlord's property, which prevents the landlord from leasing any other parts of the property to other EVCP operators. Alternatively, the operator may request a right of pre-emption (i.e. a right to first refusal) over any parts of the property that the landlord intends to use for electric vehicle charging.
Relocation ("lift and shift")
The lease may include a provision to enable the landlord or the EVCP operator to terminate the lease by giving to the other prior notice, in the event the landlord wishes to develop the site during the term of the lease. If this were to happen then it is usually on terms that the landlord would make available a suitable alternative site for the operator to house their equipment on another part of the estate. This is known as a 'lift and shift' provision.
However, the EVCP operator may resist the right for the landlord to have the ability to relocate the charging infrastructure. This is because the operator will lose profit if there is period when neither the original nor the new charging infrastructure are operational. There is an optimum location both to maximise sales and connect to the grid.
Step in rights
The EVCP operator may require the landlord to enter into a direct agreement between the landlord, the EVCP operator and any EVCP operator's lender taking a charge or mortgage over the property that gives the EV operator's lender a right to step into or be assigned the lease.
If you are acting for the landlord, this should be resisted. In the event the EV operator is unable to satisfy their debts and the lender takes over, the landlord could end up with any tenant of the lender's choosing. In practice, most commercial leases already contain provisions restricting the tenant's rights to assign or sub-let their leases except on terms which are acceptable to the landlord. If a lender has to take steps to enforce its security then arguably the same restrictions on dealing (provided they are not unreasonably restrictive) should be adequate.
The Utilities Team is experienced in advising and negotiating EVCP leases. For any queries and referrals, please contact:
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
