Radical changes to telecoms mast agreements

Landowners need to negotiate new leases or agreements now

14 December 2016

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Parliament wants to speed up the roll-out of fast broadband and create better mobile phone coverage throughout the UK with the introduction of a new Bill. To assist this, it has proposed a new Electronic Communications Code, redefining the Code of Practice that telecoms companies must adhere to, and significantly, offering them far greater rights concerning the installation and maintenance of equipment on land. These new rights will also affect existing sites at such time as leases are renewed. From the point of view of landowners, the likely outcome of the new Bill is that rents will fall.

The new Code is anticipated to come into effect in Spring 2017.

Under the new regulations, rents will in future be based on the underlying value of the land to the landowner, rather than the value it represents to the communications provider, or what their intended use of the land is. Rents will instead be calculated on the basis of what a “willing buyer would pay a willing seller” and consider the value of the land as if it were undeveloped and with the benefit of planning permission only. Any equipment proposed or already constructed must be ignored. This is likely to lead to downward pressure on rents.

Furthermore, should a telecoms company decide to upgrade their site or allow third parties to use it, they may do so once the new Code comes into effect without having to pay any additional rent and without the need to obtain permission from the landlord.  Landowners may object to any proposal on grounds of the impact additional equipment may have, or if they face any ‘additional burden’ as a consequence the works. According to the proposed Code, 'Additional burden' could mean anything that “has an additional adverse effect on the [landowner's] enjoyment of the land, or [which] causes [them] additional loss, damage or expense”. Any disputes in relation to the Code will be heard by specialist tribunals. 

We will be happy to advise landowners with telecoms equipment on their land, on leases that have either ended and are holding over, or are due to within the next two years. We would recommend that landowners take action now to negotiate a new lease or agreement, as once the Bill has been ratified the communications companies will hold the advantage.

Cardiff Waterside is a significant property holding for Aviva Investors at almost 500,000 sq ft. Our experiences show the benefit of working with a regional specialist where occupational markets can be unlocked with a good team with excellent local contacts. Ben Bolton and his team have done this for us for many years and been fundamental to our success and a very low void rate in Cardiff.

Matthew Leach, Arriva Capital Waterside