Improving connectivity a guide for landowners
Landowners with telecoms tenants should be aware of changes set out in the Electronic Communications Code (ECC) Schedule 1 of the Digital Economy Act 2017 which addresses the issue surrounding the valuation basis for telecoms sites.
- The new Code came into force on 28 December 2017 and applies to telecoms agreements entered into prior to this date and it is designed to support the rollout of a robust and sustainable telecommunications network throughout the UK. The aim is that this new Code will promote network connectivity, expand coverage and take into account the legitimate interests of all parties.
- The new code introduces wide-ranging reforms in favour of operators, and so landowners with telecoms tenants will need to understand the key changes.
- The ECC gives telecommunications operator’s statutory rights to facilitate the creation and operation of their networks.
- Under the old code, payment made by operators for the right to install and maintain telecoms apparatus was based on a “fair and reasonable assessment”
- The new code will change this and make major changes to the way that the land is valued
Essentially, the new changes to the Code introduces a valuation of the consideration paid by operators based on market value, which is then valued on a “no scheme basis”. What this means is that the value of land will be assessed on the basis of its value to the landowner, rather than on the basis of the value to the operator (which will be intrinsically tied to the land’s future use as a telecoms site).
The Government has aimed to bring the rents in line with those paid by utility companies and providers of other essential services with the introduction of this rent valuation system. In practice, compensations and consideration payable by telecoms operators to landowners will now be calculated on a market-value basis, excluding any value attributable to the proposed telecoms network use, or attributable to the enhanced rights to share use or upgrade equipment, and to assume there are other sites the Operator could use.
As a result of the revised assessment for rents under the new Code agreements, income streams for landowners are likely to decrease. In future, the rent will purely reflect the value of other possible uses to which the site – usually only a small area – could be put.