Landowners have, historically, enjoyed considerable rental income when permitting telecommunications providers to put mobile phone masts on their land. With the introduction of new legislation in the form of The Digital Economy Act 2017 (“Telecoms Code”), the heady days of rental windfalls to landowners are long gone.
What has changed?
The new Telecoms Code has brought in a different method of valuation for the land in question. The previous method of assessment to be undertaken was by reference to the value of the land to the telecoms operator. This meant that very high annual rents could be sought by landowners with a site important to the operator.
The change means that rent is now assessed on what the landowner has lost in terms of giving up the use of the land. A very different valuation method and much less in terms of rental value. Incidentally, this is also the same method of assessment applicable to utilities providers wanting to use land.
What sort of rental income are we really talking about?
In short, low if not nominal amounts. An example of the new Telecoms Code in practice was seen in a case involving a borough council. EE and Three wanted to move their mobile phone mast equipment from one council building, to the nearby plant room on the roof space of a council-owned block of flats. Previous negotiations under old legislation had resulted in an agreement on rent at £21,000 per year. However, the lease was not completed by the parties.
Following the introduction of the Telecoms Code, EE and Three proposed rent of £2,551.77 per year. Their surveyor pushed the matter even further to a stated valuation of £1 per annum, basing this on an assumption that the roof space could only ever be used for a roof garden or for solar panels. Both of these uses warranted £nil value.
The council tried to argue that the true rent under the Telecoms Code was probably lower than £21,000, but more than nominal in value, on the basis that the legislation was new and to assess it as nominal value was not the intention of Government in the legislation. The Tribunal ruled against the council, setting a rental value of £50 per year and an appropriate contribution to service charges, resulting in a rent of £1,000 per year.
Previous legislation was no longer fit for purpose, because it was so old it pre-dated all the Gs being rolled out; and it failed to deal with the incompatibility of business tenant’s rights under the Landlord and Tenant Act 1954. Those of us working in the area were all hoping for decent change, having waited so long for it.
The intention by Government behind the Telecoms Code was to speed-up 5G roll-out, by steam-lining the negotiation and valuation processes, and giving more arbitrary rights to operators. However, the disappointing reality is that it has had the opposite effect to what was intended. Landowners are simply not coming forwards. Or, when approached with the offer of low or nominal rents from telecoms operators, landowners rightfully question the incentive of having masts on their land, which they are unable to readily get rid of.
As a landowner with existing telecoms equipment on your land, it may be that you are shortly approached by an operator with regards to the new Telecoms Code or, you may be a landowner who has been approached by an operator to use your land. Baines Wilson can assist you with removing masts from your land and negotiations with telecoms operators. Please contact Lucie our Property team on 01228 552600 for further information.