In recent times, rural landowners have seen the benefits of diversification by granting leases to mobile telecoms operators for telephone masts and other equipment.
Under the old Telecoms Code rents were generally set at a market rate favourable to the landowner. The landowner could also obtain further payments if the operator wished to share occupation with other telecoms companies.
At the end of December 2017, a completely new Telecoms Code was introduced. The new regime includes some important changes, which the UK Government intends should allow private telecoms companies greater and more economical access to land.
The most significant changes are the method of determining the rent and the right now given to operators to share sites without the requirement to make any additional payments to the landowner.
Determining Rent
As with the old Code, there are statutory provisions for deciding how much rent a landowner can demand from a telecoms company in the absence of agreement. However, the new Code specifies that the rent will be fixed according to its value for purposes other than telecoms and on the assumption (which will often be fictional), that the telecoms company has another competing site available to it. This will have a downward effect on rents.
Site Sharing
The old Code contained no rights for telecoms operators to share land with other telecoms companies. Each company had to negotiate its own deal with the landowner or rely on the existing tenant having sub-letting rights. Under the new Code, telecoms companies will be able to share their sites without requiring any express permission from the landowner. In addition the landowner will not be able to charge for site sharing.
Lease Termination
The new Code introduces a two stage process if a landowner wishes to bring a Code lease to an end. This is whether the lease has reached its term or has been terminated due to a breach by the operator.
The stages for the landowner are:-
- Serve at least 18 months’ notice and then obtain an order from the Lands Tribunal for Scotland;
- Obtain another order allowing actual removal of the equipment, which can be done only where the statutory tests are met.
The process is complicated by various factors, and it is recommended that professional legal advice is sought before entering into any agreement or where termination and removal is desired.
Recent case law
Since its introduction, the new Telecoms Code has been generally friendlier to the telecoms companies than the old regime.
The recent case in England of CTIL v Compton Beauchamp Estates Limited, the decision in which was published on 3 April 2019 by the Upper Tribunal in England, has gone some way to addressing the balance in favour of the landowner.
The first issue in the case was the determination that a landowner could not be compelled to grant Code rights to a party who was not the occupier. That party would have to obtain a grant of rights from the occupier and then ask the Tribunal to order that the landowner should be bound by them.
The second aspect concerns the method of calculating the rent. The Tribunal looked at the parties’ calculation of rent and held that the operator’s calculation was unreliable and should not be adopted. It appears that rents should be substantially higher then the nominal rents sometimes now proposed by Code operators.
Although this case has been determined in England, the new Code applies to England, Wales and Scotland and accordingly the decision is binding in Scotland.
This article was featured inIssue 71 Summer 2019 issue of LandBusiness magazine.
