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Legal Update: Renting Land to Telecom Operators

The new Electronic Communications Code (ECC) that came into force on 28th December 2017 will have a major impact on all landowners and farmers who rent land to telecom operators.

The new ECC is intended to make it easier for operators to roll out new infrastructure that will improve their services such as mobile phone masts on both public and private land.  Naturally the legislation has significant implications for both landowners and operators, including:

Landowners:

  • Are likely to be paid considerably less rent under the new ECC.
  • Will no longer receive an additional ‘site fee’ from an operator that shares your site.
  • Will have to give 18 months’ notice to terminate your agreement rather than the previous 28 days. This notice period does not apply to the removal of the equipment and you are required to serve a further notice specifying a ‘reasonable period’ for such removal.  This may involve applications to Court.

Operators:

  • Will have the right to share your site without your consent, regardless of the terms of any written agreement.
  • Will no longer need your permission to upgrade their equipment. They will also be able to install additional pieces of equipment on the land they rent without having to pay you more.
  • Will have the right to transfer their leases without your consent.

On the plus side, telecommunication leases will no longer have security of tenure under the Landlord and Tenant Act 1954. This provides landowners with greater clarity and certainty as you will be able to terminate their lease under one of four termination grounds.

Felicity Fisher, Head of Commercial Property at Else Solicitors, commented “This new Code clearly benefits telecommunication operators and has negative consequences for landowners and farmers.  We strongly advise that they take legal advice and have a solicitor help them to negotiate future contracts as these will fall under the new code regardless of whether they are renewing an existing agreement or starting a new one.  Else has strong commercial and property teams who will help landowners to get the best possible deal and avoid the various pitfalls.”

More details on the new ECC are provided below, however if you are a landowner renting land to a telecom operator (or considering renting), then please contact Pav Lalria for an update on the new ECC and how to negotiate the best deal.

What is the Electronic Communication Code?

The Digital Economy Act, amongst other things, reformed the Electronic Communication Code (ECC) by introducing a range of measures to make it easier for network operators to rollout the infrastructure required for mobile and broadband networks on public and private land.

The ECC regulates the legal relationship between landowners/occupiers and telecom providers.  It confers rights on certain providers of telecom networks to install and maintain electronic communications equipment, including masts, exchanges, cabinets and cables, on public land.

The ECC also affects new or renewing agreements between the telecom providers and landowners including the way the land rented is valued (see below for more details).  It also enables telecom providers to apply for a court order to install and maintain apparatus on private land, if they have been unable to reach agreement with you.

This update is not retrospective. The new ECC will not affect existing telecommunications agreements until the contract is renewed.  It should be noted that private arrangements between you and the operator cannot exclude the provisions of the ECC.

How Will These Changes Impact Landowners?

Rents:

This is a major change.  Rents were previously based on the value of the land to the operator.  Under the new Code, the principle of payment will be fair rents.  This means that the rent you can charge will be based solely on the underlying value of your land.  It excludes factors such as the availability of other sites and the potential profitability of the site for the operator.

The Government argues that this change was needed to stop landowners and farmers holding telecom operators to ransom.  They believe that some landowners were charging extortionate rents because the operator had to provide coverage and they had no other option but to put a mast on their land.  Unfortunately, this change also affects most landowners and farmers who charge what both they and the operators have agreed is a reasonable rent.

This change is likely to significantly reduce the amount of rent you can charge, especially where the underlying value of your land is low. As a typical example, a small 10m x 10m area worth £8,000 a year under existing agreements could drop to £300 a year under the new Code.

Site Sharing and Additional Fees: Telecoms operators will have the right to share sites without your consent, regardless of the terms of any written agreement.

You will no longer be able to:

  • Charge them for any additional equipment installed on the land they rent
  • Receive additional payments resulting from site sharing arrangements
  • You will only be able object to additional or upgraded equipment if it:
  • Has an adverse visual impact OR
  • Places an additional burden on you

As both are subjective, this area is likely to give rise to disputes.

Maintenance and Upgrades: The new Code grants automatic code rights to operators to enter your land to maintain and upgrade masts and other equipment.  It also gives them unlimited access to your site.

Right to Transfer: Under the Code, operators may automatically assign (i.e. transfer) or share Code rights without requiring your consent. This means you will have less control over who occupies your land. You may choose, in your agreement, to oblige an operator to provide you with the details of any assignment or sharing arrangements so that you can remain advised as to what is happening on your land.

Installation of Masts: Masts can be installed by voluntary agreement or by court order. If you refuse the approach of a telecoms provider, the provider may apply to the Court.  The Court can impose an agreement if it believes that:

  1. The inconvenience caused to you can be adequately compensated by money.
  2. The public benefit likely to result from the order outweighs the inconvenience to you.

You will be protected if the Court believes you are planning to develop the land or neighbouring land and an order would prevent you doing so.

Termination: This is perhaps the biggest area of change.  You must now give 18 months’ notice rather than the previous 28 days to terminate your agreement and it must be for one of the below four reasons:

  1. Substantial breaches of the operator’s obligations in the agreement;
  2. Persistent delays in making payments under the agreement;
  3. You intend to redevelop all or part of the land on which the site is located, or neighbouring land, and cannot reasonably do so unless the agreement comes to an end; or
  4. The operator is no longer entitled to the agreement because what they pay you is not adequate to compensate for the inconvenience caused by the apparatus.

The telecoms provider may then allow the agreement to end or serve a counter-notice within three months and apply for a court order. This extended notice period does not deal with the removal of the equipment.  If within 28 days of the notice you and the operator have not reached agreement on the fact or timing of the removal and restoration, you can apply to the Court for an order requiring them to remove the equipment or permitting you to remove and sell the equipment.  This two stage process will clearly involve delay and add extra expense to your development plans.

Note: the new Code does not contain provisions to allow you to relocate apparatus. As such, it would be beneficial for you to ensure that you have “a lift and shift provision” within the agreement itself, rather than relying on the Code.

If you would like further advice, then please contact Pav Lalria.