Slowdown caused by uncertainty over new code
Since the introduction of the Electronic Communications Code in 2017 which effectively placed greater restrictions on landowners and farmers there has been a substantial slowdown in negotiations between operators and third parties in respect of established and new leases.
The uncertainty created by the new code, particularly in relation to rental levels, has it seems discouraged the operators and indeed farms and landowners from entering into negotiations, with many tenancies simply being held over.
Lawyers and land agents have been waiting to see how matters are settled in the courts but as yet there have been fairly few decisions on the subject. However two relatively recent cases have given some indication on rental aspects of the new code.
The most interesting case for rent review is that of Cornerstone Telecommunications Infrastructure Limited v Compton Beauchamp Estates in the Upper Tribunal of the Lands Chamber which contained some useful comments by the judge relating to rental levels.
The tribunal gave consideration to valuation of telecom mast aspects and distinguished between urban sites and rural sites. Most interesting was the fact that the tribunal was unimpressed by the valuations on the part of any parties that resulted in figures that were “improbably high or low”. Cornerstone had offered to pay the sum of £26 for the whole 10-year term of an agreement. The land owner had requested a rent of £9,500 a year. The tribunal commented “in future references involving rural property” there should be a focus “on specific transactions in relevant comparable situations”.
If the tribunal sentiment is carried forward to future decisions it is likely to see rental levels closer to those that now exist. While this commentary is not legally binding it is strongly indicative that a tribunal believes valuers should look at “relevant comparable situations.” Whether this meets with what the Government intended to be the case is another matter, but these comments are helpful for farmers and landowners.
The second case of Cornerstone v Keast is an Upper Tribunal decision which covered a number of aspects but with regard to rental the “system of conduits” serving a site will fall within the “system of infrastructure” under the new code and be capable of being taken into account in rental valuations (that is, for site access, power cables and other utilities)
It is very likely that substantial new case law decisions are going to be needed before this market will start to settle.
Steven Corfield is a partner and agricultural specialist at Shropshire law firm FBC Manby Bowdler LLP.