With pressure to “sweat assets” and increase revenue, securing an income from your otherwise unused roof space appears a “no-brainer”. After all, telecommunications apparatus are so commonplace atop hospitals, offices and other buildings that they go largely unnoticed. If other landowners are getting in on it then why not you?
Of course, part of the reason for the ubiquity of such apparatus is policy. The government needs to provide access to telecommunications networks for service users. But enabling a service which the general public enjoy on a day to day basis comes at a potentially unforeseen cost to occupiers and landowners. With the government currently consulting on the draft of a new Electronic Communications Code, it is as good a time as any to remind ourselves of the unique nature of telecommunications leases and the considerable traps which await the unwary.
The Electronic Communications Code (“Code”)
Telecommunications operators are afforded extensive protections by the Code and their rights to install and maintain apparatus in, over and under land is wide ranging as highlighted below.
Key Considerations for Landowners
Balance Income v Risk
There are no restrictions on the sums which landowners can negotiate with operators in exchange for rights over their asset. This will ordinarily be in the form of a rent, recorded in a formal lease. With continual improvement in technology, landowners should be mindful of the possibility of demanding higher rent as income for the operators increases making their masts more profitable. The income may well justify the loss of control over the building, but it is essential that an informed decision is made and rights not granted inadvertently (see below).
Do not agree to anything without proper advice
The powers granted to operators arise upon the conclusion of a “written agreement” between operator and occupier. Such “written agreement” need not be made by deed and could unwittingly be created through correspondence. Everything should be marked “subject to contract” until final documents are agreed. Beware requests to sign “heads of terms” or “site access agreements” which may appear innocuous, but could activate the statutory protections afforded by the Code (see below).
Be aware of the practical effect of the Code powers
The Code includes a form of security of tenure (in paragraphs 20 and 21) but unlike the provisions of the Landlord and Tenant Act 1954 (“1954 Act”), these statutory provisions cannot be “contracted out”. Whilst any lease should always specifically exclude the provisions of the 1954 Act, the operator will still benefit from these Code protections. Whilst there is a procedure for serving notice to regain possession in certain circumstances, operators can serve counter-notices and ultimately apply to court to remain in occupation beyond any previously agreed term (e.g. after the expiry of the lease). The court’s powers are wide and landowners should therefore take a cautious approach at the outset. The assumption should be that once there is a written agreement that they will be unable in practice to require the operator to leave and remove its apparatus. Despite what the lease may say, this is a long term commitment. If the presence of the operator will potentially threaten future plans for the building in question, landowners would be well advised to resist any telecommunications lease. The practical cost in the long term would surely outweigh the immediate gain by way of rental income achieved.
Maintain control of your tenant occupiers
Code powers can be activated by a written agreement between an operator and any occupier (e.g. a tenant or even a licensee) and this will bind superior landlords and the freehold owner. Great care therefore needs to be taken. Most leases will prohibit a tenant from entering into such agreements, but as previously mentioned, this could still be done inadvertently. It would be far preferable to avoid having to attempt a claim for damages against a tenant. Careful management of your tenant is therefore necessary through practical monitoring and raising awareness of these risks.
Conclusion
It is not always possible to completely avoid the ever increasing Code powers afforded to telecommunications operators (the proposed new code currently being considered would increase these powers even further), but there is huge value in landowners approaching these sorts of deals with eyes open to the consequences. Terms can then be properly negotiated, and with specialist advice from agents and lawyers (with experience in this field), agreements hopefully concluded to the satisfaction of all involved. As ever it is a keen balancing act.