Demystifying electric vehicle charging points in UK real estate

In November 2020, the UK government revealed plans to end the sale of new conventional petrol and diesel cars in the UK by 2030. In June 2021, the Society of Motor Manufacturers and Traders (SMMT) revealed the sale of battery electric vehicles and plug-in hybrid vehicles were up 161% year-on-year. As many drivers around the UK consider switching to electric vehicles, the rate at which electric vehicle charging points (EVP) are being installed is significantly lagging behind the demand for cars. In 2019, there were 570 EVPs per 100 km of road, whereas the recent figures suggest that 1,170 EVPs per 100 km of road will be required by 2030 to sustain the demand.¹ Recent government proposals seek to oblige every new non-residential building and every non-residential building undergoing a major renovation with more than ten car parking spaces to have one EVP and cable routes for an EVP for one in five spaces.² So it’s important for both landowners and tenants to consider the implications and impact on commercial real estate.

How much does it cost to install an EVP?

On average, the cost of a commercial EVP can range from GBP1,000 up to GBP3,000 (plus VAT) depending on the model and its range of vehicle compatibility. The cost of cabling, electricity supply and groundworks should also be taken into consideration. In addition, there may be legal costs involved and commercial tenants may be expected to cover third-party legal and surveyor’s fees.

Is funding available?

The Office for Low Emission Vehicles is providing over GBP900 million in grants, through its Workplace Charge Scheme, to position the UK at the global forefront of ultra-low emission vehicle development, manufacture and use.³ The grants can be used by businesses to reduce the upfront installation costs (capped at GBP350 per socket) and up to 40 charging stations can be claimed on the scheme. To qualify for the scheme, the organization:

• must be a registered business, charity or public sector organization;
• should be able to demonstrate a need for an EVP(s);
• must have dedicated off-street parking for staff/fleets; and
• must own the property or have consent from the landlord for the EVPs to be installed.

Do I need consent to install the EVP?

If you occupy a property under a commercial lease, it’s important to review the alterations provisions within your lease as you are likely to be required to seek consent from your landlord and/or management company before installing the EVP. If the current electricity supply is insufficient, such that a new electricity substation may need to be installed at the premises, it’s important to liaise with the distribution network operator (DNO) early to understand whether the proposed cable routes run through land owned by third parties, as further consents may also be required.

If you are the freehold owner of a property, the installation of EVPs is considered development under the Town and Country Planning Act 1990. Certain installations, such as a wall mounted electrical outlets, may be classed as permitted development but such installations are subject to various stringent conditions, so it’s vital to check.

What are the benefits?

Alongside demonstrating your business’ green credentials, there are other benefits to installing EVPs at your property. For those businesses operating a fleet of vehicles, one of the main benefits is the cost saving. The cost of charging an EV is far lower than the price of fuel, meaning electric car cost per mile figures are significantly lower than for internal combustion engine vehicles.⁴ If you decide to install an EVP in your workplace, you can make the EVPs available to the public as well as your employees. While the employee will save on travel costs, you can charge the public a tariff to use the EVPs, which will generate additional revenue. If you operate a retail business, you can attract EV drivers looking to stop off and charge their vehicles, which in turn means the customer stays and browses for longer.

Other considerations

• If a new electricity substation is required to meet the demand of the new EVPs, you may be required to transfer part of your freehold land to the DNO or grant it an electricity substation lease. It’s important to engage with the DNO as soon as possible to discuss its requirements and the terms of any electricity substation lease.
• If your landlord is installing EVPs, it’s important to discuss the terms of usage. Will you have exclusive use of the EVPs or will they be used by other commercial tenants? How much will you be charged to use the EVPs? Will the cost of installation of EVPs be recovered via the service charge and will it have an impact on any future rent reviews? Will there be a significant increase in the cost of insurance rent?
• If your tenant has sought consent to install EVPs, you will need to: (i) consider the length of the term of the electricity substation lease (DNOs usually require a 99-year lease, which may cause problems as most occupational leases are 5-15 years in length); (ii) notify your insurer of the proposed works; and (iii) consider any reinstatement obligations at the end of the term of the lease.