This article is written with supporting commentary from one of our clients, Cosmic Charging.
Introduction
“The government has committed to phasing out new cars that rely solely on internal combustion engines by 2030 and from 2035 all new cars and vans sold in the UK will be zero emission.”
This sentiment delivered by the Chancellor as part of her Autumn Budget statement follows the Government’s wider election pledge that the UK will be aiming to get net-zero by 2050. We are anticipating further announcements following a meeting concerning the Zero Emission Mandate on 19th November, however clean air zone charges which are already in place in parts of the UK will continue to impact drivers living and working in these zones and drive increased take up of electric vehicles.
Workplace charging schemes, as opposed to destination sites (such as supermarkets, retail premises or leisure outlets) can obtain funding of up to £350.00 per charging point for up to 40 points. Whilst not a cash sum, a voucher is supplied to be used with a government approved contractor.
Many owners and developers of commercial properties will need to consider more seriously whether the installation of EV charging points on development sites and existing properties will encourage commuters and visitors driving electric vehicles to charge them on site, and where any existing properties may become subject to requests from existing Tenants to improve EV charging capabilities.
“ For context that there is industry lobbying at the moment around the introduction of a ‘Right to Charge’ for residential properties which would look to give residents more power to force landlords to implement EV in their property” [Rob Hughes – Cosmic Charging]
If lobbying is successful, then by implication this will likely increase the pressure on commercial property markets to follow suit.
Within this article, we look at the practical implications for landlord owners and tenants of existing commercial properties who are looking to future-proof their premises by installing new EV charging points, otherwise termed as retrofitting.
Tenant Installation – What is a ‘Licence to Alter’ and when is it needed?
Licences to Alter are utilised when tenants are seeking to make alterations to the property for which they benefit from a formal lease arrangement. Tenants don’t typically have the automatic right to make alterations to a property without the landlord’s permission. Where alterations are permitted under the lease, this is generally subject to the prior written consent of the landlord in the form of a licence for alterations. This allows the landlord to be notified in advance of any works and to consider whether there are any reasonable conditions that should be imposed.
The form of covenant in the lease and the nature of the property demised under the lease will dictate the nature of the approach to the landlord. It is important to properly analyse the covenants within a lease to decide whether it restricts alterations and, if so, to what extent. Covenants can be drafted so as to prohibit any form of alterations or are drafted conditionally on obtaining landlord consent or a hybrid of these approaches.
For a landlord, controlling alterations is important to protect the value of their investment. A landlord needs to strike a balance between maintaining control over the building on the one hand and ensuring that the permission requirements or restrictions imposed on tenants do not prevent the tenant from operating its business effectively or go so far as make a property less appealing.
Landlords Installation
Landlords seeking to push forward an installation of charging points would be within their rights to do so as owners of the properties and it is likely that a tenant would view the installation as an improvement however the exercise of rights of access and rights to carry out the works will need to be balanced with the tenants right to quite enjoyment.
Noise, dust, and disturbances can become difficult for a tenant to manage, particularly if the works cause significant interruption to access or energy supply. The important thing to remember is a landlord is to treat the tenant with respect. Be transparent with the tenant about the work beforehand and seek their agreement. It may be reasonable to offer some kind of discount off the rent to compensate for the inconvenience, where this would be considered substantive.
“If the installation is managed by a competent installer or charge point operator then interruptions to power can be coordinated out of hours or at the weekend minimising disruption, the final connection to the electrical supply is not normally a long process. Parties should be provided with a comprehensive set of RAM and a schedule of works for each site to ensure the tenants are informed of any works or disruptions.” [Jay Stevens – Cosmic Charging]
What considerations are there ahead of any formal licence application?
Installing new equipment, reconfiguring the layout, or upgrading facilities to an existing property will require both the landlords and tenants involvement.
Nature of alterations
The scale and nature of alterations will be vitally important. Are these wholly external, structural, or non-structural, wholly within the premises demised under the lease or do they involve works outside the demised premises?It is likely that in relation to free standing EV charging points, the points themselves would be installed either within common parts of a building/areas such as car parking facilities. In this instance the landlord could require the tenants to enter into a new lease of the footprint of the charge point and car parking, inside of the common parts.If the tenant needs to install equipment outside the demised premises it will need appropriate access rights over the landlord’s retained property as well as rights to install, retain, repair, and remove the relevant works or equipment.The alternative is the granting of a right to the Tenant – this would perhaps be more likely where a charging point is being installed on the side of a building and so projects out of the demised premise in a minor way.The number and nature of the charging points would be vital in order to flesh out how best to approach any negotiations between the parties.
Approvals
Depending on the nature of the installation, the landlord themselves may require consents from existing utility providers to install the EV charging points’ associated cabling and other infrastructure, and if cabling needs to run through neighbouring land, an easement will be required. Where the land is mortgaged, the consent of the lender will need to be obtained, and if the landlord’s interest is leasehold, consent will also be required from the superior landlord. Where there is a Management Company, they would need to be a party to the licence.
Insurance
Landowners should also 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. Depending on the nature of the policies in place and the requirements for insurance under the lease, these will need to be reviewed and potentially expanded accordingly, which may or may not impact existing premiums.
Compliance
Licences will ordinarily include terms that state the tenant needs to comply with relevant legislation, which would include planning and building regulations approvals. For wall mounted outlets or outlets on an upstand, these are usually permitted under the General Permitted Development Order 2015, so long as there is an area lawfully used for off-street parking and certain other limitations and conditions and specific advice should always be sought.
Application for Consent
It is essential that consent be sought before any steps are taken to install or alter the property. If an alteration is carried out by a tenant before consent has been requested from a landlord, that will amount to a breach of covenant under the lease even if the landlord could not reasonably have refused, had its consent been requested. If the tenant’s plans change over time, the landlord must be kept updated about what is proposed.
Requesting landlords’ consent is not the end of the requirements and it does not follow that a landlord will automatically approve any application. The landlord might appoint third parties to carry out a technical review of the application. They may also raise a number of questions to consider whether the proposals made are realistic, reasonable, or appropriate for the property. A landlord should seek advice before refusing consent, to ensure it is acting reasonably in any instance.
Improvements
If there is a prohibition on making alterations, charging point installation may be considered an ‘improvement’, if so a tenant can serve a notice under the Landlord and Tenant Act 1927 (LTA 1927). If works are an improvement, a notice of an intention to do the works should be served and a landlord then has three months to object. Compensation can be claimed at the end of the tenancy for undertaking such improvements.
There is no prescribed form of notice for the purposes of LTA 1927. A letter will suffice, if accompanied by plans and specifications that identify the works to be carried out. Consequently, landlords and their professional advisers must check correspondence proposing alterations to establish whether it might constitute such a notice, particularly where the lease expressly prohibits the proposed works.
Where can Goughs help?
Whether you are Landlord or a Tenant considering alterations to your properties more widely or in receipt of an application for the same, our commercial property team can help We work across a number of different sectors, including working closely with specialists such as Cosmic Charging to ensure we are at the forefront of developing markets.
If you would like any support of assistance, please get in touch with our Commercial Property team.
Cosmic Charging’s mission is to empower urban communities by enabling low carbon transport. Its founders have over 35 years combined experience in the EV energy sector having been instrumental in building the UK’s largest EV charging network and are now striving to provide scalable solutions in complex locations, specifically in apartments and residential shared parking. Contact Cosmic
