Should You be Worried About The New Telecoms Code?
Following the passing of the Digital Economy Act in 2017, landowners have started to become aware of a new telecommunications code ("Code") which will govern the way in which telecoms operators might install or keep installed electronic communication apparatus on their land.Normally this will consist of a mast with antennas either on a field or rooftop or it might consist of cabling across land or into buildings. For many of those landowners the Code has come as an unpleasant surprise. Some of the reasons for this are:
Reduced consideration (rent)
The Code has introduced a new test for how consideration (rent) will be valued. The intention was that the new valuation method would reduce the amount that operators would need to pay. The Government's impact assessment undertaken in 2016 expected that the reforms would reduce landowners' rents by 40%. However, the operators have used the Code to demand significantly greater discounts to the rents and it has not been uncommon for reductions of 90% or more to be demanded in the case of existing infrastructure and with very small rents being offered for new infrastructure. This has made landowners reluctant to have the infrastructure on their land. Initially the Upper Tribunal (Lands Chamber) ("Tribunal") which has been tasked with dealing with any disputes pursuant to the New Code accepted that the rents might be very low but more recently the Tribunal stated "We are not persuaded that the tiny sums suggested…take into account the understandable reluctance of rural landowners to lose control of their land to the extent that entry into an Agreement for Code rights is likely to entail". As a consequence we may be starting to see improved terms being offered by some of the operators.
Removing the operator
It has always been difficult to remove a telecoms operator from land but the Code has made the process for removal even more difficult. A landowner must serve at least 18 months' notice if he wants to terminate the occupation of the operator and that notice can only expire on or after the term end date unless there is a break clause. Even where notice has been served the landowner will only be able to take back possession in specific circumstances (set out in the Code) or if the operator agrees to voluntarily vacate the land. Furthermore, the old statutory right to lift and shift the electronic apparatus has been removed by the Code. It may be possible to improve the position by agreement with the operator and we are finding that some operators are willing to sensibly engage on the terms.
Problems with development
A mast or other electronic apparatus may sometimes have a detrimental effect on the ability of the landowner to develop their land. This can be because the apparatus is on the land itself or because the terms of the agreement with the landowner prevent the landowner from being able to undertake certain works on their adjoining land. Obviously, the operator will not want anything the landowner does on their land to interfere with the operation of the mast or equipment and may want wide rights over some of the land in order to properly operate. Whilst the Code does allow a landowner to resist the imposition of electronic apparatus on land they want to develop the landowner will need to prove their intention to develop and this can be difficult. The same applies when seeking to terminate the agreement on the grounds that the landowner wants to develop. Where there is a genuine intention to develop the land then it should usually be possible to prevent or remove the operator but not without properly following the process set out in the Code and engaging with the operator constructively as soon as possible.
Landowners will often be very concerned about incurring significant cost in dealing with Code agreements due to the low value. This is despite the fact that operators will normally make a contribution to those costs.However, operators will not pay the landowner to dispute whether electronic apparatus can be installed. They will only pay for negotiations for the Code agreement to be put in place. Although the value might be low the consequences of having a Code agreement imposed can be significant and should therefore be taken seriously by all landowners.
The above article was written by Dan Cuthbert. Dan is a partner at Foot Anstey and can be contacted on firstname.lastname@example.org or 01179 154932.
The content of this article is for general information only and does not constitute tax advice. It should not be relied upon and action which could affect your business should not be taken without appropriate professional advice.