For many landowners, an attractive way to utilise their land without creating too much disruption to their core farming business, was to allow telecommunication masts to be erected on their land. Whilst not visually attractive, the masts would generally be low maintenance and the mast Operators would ordinarily have to pay a reasonably healthy annual rent to the landowner.
Whilst the previous legislation, the Electronic Communications Code dating back to 1984, was not ideal, it did provide landowners with various rights which enabled them to negotiate quite favourable terms with the Operators. However, the legislation was very dated and technology has moved on exponentially since then and so a new Code has been brought into force at the start of this year. The idea behind this was to bring the provision of data and broadband to the public to a similar level of importance as other utilities such as water and electricity. The Government has stated that the new Code is designed to acknowledge the economic benefit for all in society from investment in digital infrastructure whilst balancing the right of landowners.
As a result of the new Code the telecommunication Operators now have more powers that are similar to those of the basic utility providers, but what does this mean in practice if you are considering allowing a mast onto your land or even renewing an old agreement?
The key changes are as follows :-
Upgrading and sharing – previously, the Operator would ordinarily need to seek the landowner’s consent if the agreement was to be transferred or if another Operator wished to install more equipment on the existing mast. This was a useful way of creating further income for the landowner but the new Code deems any provision which requires payment of further rent to share the mast as void. The new Code also allows the Operator to transfer the mast agreement, and even share the mast, without even obtaining the landowner’s consent. If negotiating a new agreement, it would be prudent to make sure that the Operator has to provide confirmation of any sharing or transfer so at least the landowner knows who is going be to their tenant.
Valuation – the basis for the valuation of sites falling within the Code i.e what rent would be payable has changed from an open market basis to a ‘no scheme’ basis. So whereas previously the rent was assessed on the value of the land to the Operator (which could have been substantial if the location was strategically important), the new basis is to assess the value of the land by reference to the open market value of the land from the perspective of the landowner only. The reasoning behind this is that whilst landowners should be compensated for the use of their land, they should not be able to profit from an increase in public demand for data.
Landlord and Tenant Act 1954 – the changes in the new Code in this regard are likely to be welcomed by both Operators and landowners. Previously, there had been confusion as to whether the Act applied to mast agreements and landowners had to commence two lots of proceedings running in parallel to try and terminate agreements. The new Code is clear, if the primary purpose of the agreement is the operation of the mast, then the Act does not apply.
Termination – Under the old Code, it was possible to give Operators just 28 days’ notice if the landowner wanted to terminate an agreement. The new Code has brought in a much longer notice period, 18 months, and the landowner also needs to provide a further notice specifying a ‘reasonable’ period in which Operator should remove their equipment. Whilst the change in timescales sounds dramatic, in practice, given the legal delays that could arise under the old Code, and the time it took for Operators to decommission their equipment and remove the same, the timescales are likely to be very similar.
So what will the new Code achieve? The main aim is of course to satisfy the public’s ever growing demand for better data coverage by allowing Operators to install masts without be held to ransom by landowners. The Operators will no doubt be happy with the new levels of protection that they receive under the Code, but landowners are facing reduced rents and less control over their land. This may well lead to less landowners wanting to enter into such agreements, but as with legislation in relation to other services, Operators will be able to obtain a court order to impose an agreement in certain circumstances.
If you are considering any telecommunication sites on your land, or if you have existing agreements on your land, you should review your options carefully and seek professional advice from one of our team of specialists at Crombie Wilkinson.
For more information or further advice, please contact Ian Barnard, Director & Head of Company Commercial Team on 01653 600070.