The recent fuel crisis here in the UK has created a massive surge in interest for electric cars and with increasing demand, now is the time for commercial landlords to consider their opportunities to capitalise on rising demand for EV charging points.
Electric car charging is a vital part of the green energy revolution and the inclusion of charging points makes commercial developments greener, more sustainable and reduces carbon emissions. It’s not surprising that they make developments more attractive, but there are a series of key areas commercial landlords should cover off.
Workplace Charging Scheme
First and foremost, the Government has put aside £1 billion to fund equipment for electric cars. Any business can apply under the Workplace Charging Scheme for up to 40 charging sockets with a 75% contribution towards the installation of an EV charging point. This equates to £350.00 per socket and therefore a significant saving.
Next up is VAT. HMRC’s most recent briefing in May 2021 provides that VAT is chargeable at 20% for electricity supplied for car charging in public places – for either charging stations or kerb side points in city centres. In comparison, if individuals charge their cars at home, domestic electricity is used and VAT is charged at 5%. In either case, employers cannot recover VAT on business mileage. However, if employees use workplace charging equipment and the employer supplies electricity through cabling on the estate, businesses can indeed recover VAT on the element that applies to business mileage.
Charging leases and equipment ownership.
Whilst Landlords have an opportunity to enhance estates and developments, it is important to take into consideration the provisions under electric car charging point leases. Additionally, tenants would ordinarily own the equipment but not always. Landlords need to consider security of tenure issues if the tenant is not the owner.
The arrival of charging point leases on an estate or development may well have a knock-on effect on both the service charge and the services offered by the landlord. For example, do the existing occupational leases on the estate have sufficient flexibility to vary either the service charge or services offered? Charging leases may be attractive to occupational tenants, but landlords do need to be aware of the existing lease requirements.
A landlord’s right against a tenant in respect of reinstatement is important in any lease. However, when dealing with new technology it is vital to consider whether a remediation bond should be introduced. This would require the tenant to pay, halfway through the term of the lease, an amount to the landlord equivalent to the reinstatement cost of the premises. A landlord could then draw against this bond if the tenant does not reinstate adequately.
The final point is around planning. 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. Whilst tenants will not need to apply for planning, they will of course need to comply with legislation.
Overall, there is no doubt the rise in demand for electric car charging points will create an increased interest from landlords and tenants alike but landlords will need to take specialist legal advice. Our Commercial Property Team are well versed in reviewing and advising on the charging point leases that underpin this increasingly relevant and popular technology.