Legislation governing rights for telecommunications equipment over land and property has evolved quite dramatically over the last few years. This is making it challenging for any asset owner to know where they stand when operators come knocking on their door with a request to renew a lease or negotiate an agreement for new apparatus, more often than not also threatening a substantial rent reduction. This article will investigate the changing landscape of telecoms in the UK.
The History of Telecoms
Prior to 2017, the Telecoms industry appeared to favour the landowner. Commercial annual rents were being paid and the assessment of rent took into account the operators’ use (running a cellular phone network). Landowners could benefit from additional income by allowing the sharing of apparatus and allowing upgrade works, and rent reviews were carried out in line with market rates. This changed in 2017 with the introduction of a revised Electronic Communications Code (the ‘Code’) where operators were able to assess mast rents on a ‘no scheme’ valuation principle, meaning that any operational use of the site for telecoms purposes would be disregarded, and only the pre-existing use of the site would be considered in assessing rental value. For sites on agricultural land, this could be minimal. Operators were therefore reducing mast rents from an average of £6,000 per annum to an average of £500 per annum. Alongside this, the ability for landowners to earn additional income from site sharing and upgrade works came to an end and there was very little ability to bring the lease to conclusion.
The Changing Landscape of Telecoms – Legislation
More recently, the Product Security and Telecommunications Infrastructure Act 2022 (PSTIA) was passed in parliament, which has further strengthened operators’ position in relation to rent and occupation of land and property. The drastic rental reductions under the Code could only be applied to new leases and expired leases which were not protected by the Landlord and Tenant Act 1954. The PSTIA amended the valuation provisions of the Landlord and Tenant Act 1954 to align it with ‘the Code’ as detailed above.
Operators have therefore been offering less than half the original rent during the renewal process. Unfortunately, whilst many are willing to negotiate, some are posturing and waiting to seek agreements through the courts. It is therefore important for asset owners to engage with telecoms advisors who are tuned in to court rulings and valuation techniques and will be able to ensure that optimal terms are being agreed.
The Changing Landscape of Telecoms – Affect on Rents
Unfortunately, there is no escaping from the fact that rents are reducing, and clauses have been tightened up, but we can take the stress out of your hands and act on your behalf using our specialist knowledge and experience.
If you would like to discuss any telecoms-related matter, whether you are part way through negotiations or following direct correspondence from an operator, please contact Holly Thompson in our Rugby office by emailing holly.thompson@howkinsandharrison.co.uk or Andrew Pinny in our Towcester Office by emailing andrew.pinny@howkinsandharrison.co.uk.
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Julia Trapp
Julia looks after all of our marketing communications, printed material, design, branding, publications, digital marketing and advertising. She has worked across a number of industries in marketing roles and outside of work, if usually found on a netball court or coaching from the side lines.
