Telecoms Masts Legislative Framework Continues to Evolve
Whilst the ‘new’ Electronic Communications Code was introduced over 6 years ago in late 2017, the legislative framework behind telecommunications leases continues to evolve and change shape. Both amendments to the legislation, and cases going through the Tribunals (setting new precedent as they do so), have given landowners new things to think about when engaging in telecoms lease negotiations, for better or worse.
Rents continue to be squeezed by Operators, fueled by the generous rights provided by the Code, in comparison to historic landlord and tenant legislation. However, we at least seem to have moved away from the pitiful rent offers that were being put forward, which saw annual rents proposed, in some cases, in the mere double digits.
Sufficient case law now seems to be in place demonstrating the more holistic view that needs to be taken when assessing the consideration due under a Code lease, which should include not only the ‘rent’ element, but also reasonable and proper compensation for the occupation of the site by the Operator. It is imperative when negotiating any new lease or renewal that all relevant factors are considered to ensure a landowner is not unnecessarily burdened.
However, care should be taken when negotiating these terms to ensure they remain fair and reasonable. The recent case of Marks & Spencer PLC v CTIL [2023] demonstrated this point. Whilst CTIL (the Operator) won this case, the Tribunal found that the terms put forward by CTIL were not ‘wholly fair or reasonable’ and as such decided that it was reasonable for M&S to oppose and challenge the proposed renewal terms.
This could have gone the other way. If M&S had put forward unreasonable terms, or otherwise acted unreasonably, the Tribunal may have decided that the landowner should pay the Operator’s costs in bringing the case to Tribunal.
There is a general principle that should be applied, that whilst both parties are of course at liberty to put forward any and all reasonable arguments/proposals, all reasonable effort must be taken to resolve any issues via negotiation without involving the Tribunal. Failure to do so risks a possible costs award in the other party’s favor.
The interaction of the Code and the Landlord & Tenant Act 1954 (LTA 1954) – the usual/historic basis for commercial leases – has come under renewed scrutiny following the recent case of On Tower Ltd v Gravesham Borough Council [2023].
The Operator’s opportunity to renew the existing telecoms lease under the LTA 1954 was successfully defeated by the landowner, following the landowner serving a notice to quit. However, the Tribunal seemed to find sympathy with the Operator, and allowed an application for lease renewal under the Code regardless, due to the technical nature of the Operator’s failure to renew the LTA 1954 lease, which sets something of a concerning precedent in favor of Operators who have existing sites held under the LTA 1954.
Navigating telecoms lease renewals remains a murky environment, fraught with potential risks to landowners. Whilst the principle of delivering high quality network coverage across the country is difficult to argue with and should be supported, landowners should not be made to bear the practical and financial brunt of doing so. It is probably fair to say that the majority of landowners would simply rather have a vacant site, rather than let to Operators on the rents currently being paid.
It has never been so imperative to seek professional advice when faced with either new or renewal telecoms leases, to ensure a best-foot-forward approach and maximise the value of your assets in this ever-changing regulatory landscape.
