Telecommunication Tribunal

Recent legal rulings on rental levels are sure to affect negotiations between landowners and telecom companies looking to locate phone masts on their property.

The Upper Tribunal (Lands Chamber) in England has settled on a process for determining Electronic Communications Code (Code) rental valuations. Three recent decisions issued by the Upper Tribunal concerned disputes involving rental values for telecommunication sites under the 2017 Code. The relevant cases are:

EE Limited and Hutchison 3G UK

• Limited v Affinity Water Limited (Affinity Water case)

On Tower UK Limited v AP Wireless • (UK) Limited (The Audley House case)

EE Limited and Hutchison 3G UK

• Limited v David Paul Stephenson and AP Wireless II (UK) Limited (The Pendown Farm case)

The Upper Tribunal in England and the Scottish Lands Tribunal in Scotland have the power to set Code agreements including determining disputed clauses and the appropriate rental levels.

Paragraph 24 of the Code confirms the amount of the consideration (rent) payable by an operator under an agreement imposed by the Tribunal “must be the amount or the amounts representing the market value of the relevant person’s agreement to confer or be bound by the code right (as the case may be)”.

Historically this has led to comparable evidence being placed before the Tribunal in order to assess the appropriate rental level. However, these recent cases have shifted the emphasis away from the comparable method of valuation to a new, more complex, three-stage valuation assessment, as used in the On Tower v Green (Dale Park) case.

Stage (1) is to assess the underlying value of the land and then (2) add the value of the additional benefits granted to the tenant, then (3) value the additional burden on the landowner for the grant of the Code agreement. The recent cases have produced a table of proposed Code rents under Paragraph 24 as follows:

Telecommunication rents have traditionally been based on a market rental value using the comparable method of valuation so it is unusual to depart from this method of assessment other than for stage one of the three-stage process. The mobile operators are regularly quoting the table of rents when applying for new Code agreements or lease renewals as it is beneficial for them to agree rents at these levels, often implying that there is no option but to agree to their proposed terms.

Rents are still being agreed generally above these levels and when reviewing any rental decisions, the effect of inflation since that date also needs to be taken into account.

Whereas the rental level is an important consideration for any telecoms agreement, there are many other terms of the agreement that are equally important for protecting a landowner’s future rights. For example, we often find that there are no rent review provisions offered leaving the landowner having the value of their rent eroded by inflation each year and at the end of the term potentially only having the option of a costly Tribunal process in order to update the rent to an appropriate level.

It is important to seek specialist advice ahead of telecommunication negotiations in order to protect rights and futureproof agreements.

All the landowner’s reasonable fees, without cap, should be paid by the operators for progressing a Code agreement as the Code should be costneutral to landowners.

Mike Reid 07909 978 642 mike.reid@galbraithgroup.com