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18 September 2017 | Comment | Article by Peter Hurn

Five things landowners should know about the new Electronic Communications Code

Telecommunication companies have a statutory basis to install and keep landline equipment on private land and are able to apply to court for an order enabling them to install equipment in the event that a landowner refuses. Their rights were granted in 1984 by the Electronic Communications Code (the Code). The Code has been widely criticised since the telecommunications industry has evolved and despite an extension of the Code in 2003 it is still regarded as complex and difficult to apply.

The Digital Economy Act 2017 received royal assent on 27 April 2017 and introduced a new Electronic Communications Code (the New Code). The New Code has made some significant changes to the regime and grants operators the ability to expand their networks with greater freedom.

The main reforms that landowners should be aware of are:

  • Rent

The New Code seeks to bring the rents paid by operators in line with the rents paid by utility providers with the introduction of a new rent valuation system. The new ‘no scheme’ valuation will value the land based on its value to the landowner without the presence of the telecommunication equipment, rather than the operator. This is likely to reduce both the rents received by landowners and any compensation received for loss of their land. It is expected that more disputes will arise between operators and landowners as to the level of compensation and rent.

  • Site sharing and additional apparatus

In order to cater for the ever changing networks, operators will have the right to share occupation of the land with other operators. Currently landowners often receive a ‘site share fee’ or licence fee in these circumstances and this is new right is likely to limit the landowner’s ability to earn extra income. Similarly, the operators will no longer require the landowners consent to install additional apparatus or to upgrade. This will remove the landowner’s ability to renegotiate higher rents in return for additional apparatus.

  • Security of Tenure

Telecommunications leases are now removed from the Landlord and Tenant Act 1954 ‘security of tenure’ provisions and instead will benefit from an alternative form of security in the New Code. Contracting out of the New Code is now explicitly prohibited.

  • Resolving disputes

A more efficient dispute resolution procedure is introduced by the New Code. Where the landowner and operator have been unable to agree terms, then a court is able to impose the New Code on the landowner where they consider the financial compensation to be adequate and the public benefit outweighs the prejudice to the landowner.

  • Overriding interests

Telecommunications leases granted under the New Code will be overriding interests capable of binding successors in title even where they haven’t been registered at the Land Registry. Buyers will need to ensure sufficient due diligence is carried out to establish whether any telecommunications right affect land and whether any cables lay underground.

The New Code does not come into effect immediately but requires the Secretary of State to issue regulations bringing it into effect. Landowners should consider reviewing any ongoing agreements with their operator tenants and deal with any renewals of expired agreements now as it is expected that operators will attempt to delay negotiations until they can benefit from their additional rights and lower rents under the New Code.

Author bio

Peter heads up the fastest expanding real estate team in Wales. He was responsible for negotiating the lease for one of the biggest pre-let office deals in Wales, the firm’s new landmark headquarters at Two Central Square.

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