Parking Update: Code of Practice and its possible implications
In January, we published an article on the investment opportunities in parking post pandemic, see here. Here we discuss three possible scenarios for the Penalty Charge Notice (PCN) price cap and how they may impact the parking industry.
Parking operators issuing what are often perceived to be unfair and excessive fines is regularly making headlines – there is clearly demand for change amongst motorists. The Parking Code of Practice was proposed in February 2022 to help protect drivers from unreasonable parking charges through a PCN price cap. Although this has currently been withdrawn, following legal challenges, the introduction of legislation in some form is expected before long.
Armstrong has analysed different scenarios and the impact these could have on the parking industry:
- Compromise (considered likely)
Softening the proposed PCN cap is a plausible outcome. The government is likely to seek a quick resolution to the legal challenges and offering a compromise to operators (especially given current macroeconomic conditions) is likely.
- Proposed price cap remains (a possibility given continued public pressure)
The government could engage stakeholders to justify the proposed PCN cap. However, although many believe the Code of Practice would help ensure drivers are treated more fairly, only a quarter of respondents to the original consultation supported a 50% discount in PCN charges, so the government’s case may be difficult to strengthen.
- Code of Practice abandoned (considered unlikely)
This legislation is viewed as important in the pursuit of fair treatment of drivers and is therefore unlikely to be cancelled completely.
Impact on parking operators
A PCN price cap could put some operators under financial pressure if implemented as originally proposed. However, there would also likely be a significant increase in offences if the penalty was reduced – a rise in PCN volumes would therefore partially offset the negative impact of any price cap. Furthermore, the impact of ANPR adoption (which is happening at pace across the UK) and the resultant uplift in PCNs this will cause, is expected to outweigh the negative impact of a PCN cap on parking operators.
If the Code of Practice is abandoned altogether, operators could grow revenues significantly as ANPR is successfully rolled out across their estates. However, those servicing commercial landlords may still have to adapt. Public pressure is mounting against unfair charges and they often have a negative impact on the consumer experience. Businesses with parking assets as the customer entry point could see the benefits of less aggressive parking enforcement – operators may therefore need to rethink policies even if legislation doesn’t force change.
Investors will need to understand the implications of the PCN cap on its parking portfolio and investment plans. Armstrong has modelled, in depth, a broad range of scenarios and their potential impact on volumes/revenues. Please speak to Jack or a member of the team about opportunities in parking, or to discuss existing portfolios and opportunities to maximise revenues and minimise risks in this changing environment.
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