The property industry is taking stock of the new Electronic Communications Code (ECC) which granted mobile phone companies enhanced statutory powers, enabling them to apply to the courts for compulsory rights over roadsides, fields and rooftops. The intention of the legislation is clear: to reduce rents and deliver improved communications coverage across the UK.
The Code underlines the way in which mobile telephony is now widely considered an essential of life – as necessary as water and electricity. Yet its introduction raises legitimate concerns among property owners and has been a matter of considerable debate.
Operators view the Code as granting them the ability to obtain compulsory purchase-style rights to install equipment and pay minimal rents or even compensation-only payments. Conversely property owners argue the legislation grants wider rights than traditional leases (and consequently derives higher rents) and say the operators should pay a commercial consideration for rights that cannot be granted under the ECC. They will also highlight their right to ‘injurious affection’ and other compulsory purchase-style compensation.
The legislation will not only lead to questions over rent, but also the ability to control what equipment is installed. The ECC intends to allow telecoms tenants to site share free of charge. Rooftop owners will be particularly concerned at the prospect of their telecoms tenant having freedom to permit third parties to occupy their rooftop, with no extra payment to reflect the enhanced commercial use and increased risk and disturbance.
While the legislation offers some comfort in terms permitting upgrades, provided they do not cause unnecessary burden, landowners will perceive the fact that they cannot control what is installed on their own property to be an abuse of their property rights.
One of the greatest areas of concern will be where property owners are looking to develop rooftops or bare land. The new legislation gives the operators more robust statutory powers to take up and remain in occupation. Both the existing telecoms code and new ECC attempt to protect the landlord where there is the genuine intention to develop. However where a development is to take place, vacant possession is king: a sitting tenant is therefore a concern, and a sitting tenant with enhanced statutory powers is a serious financial risk.
Whether compulsory powers and forced rent reductions will lead to further telecoms coverage remains to be seen. Certainly where land or rights have been acquired by compulsion, for example constructing motorways or erecting pylons, the compulsory purchase world has often been an uncomfortable place in which to operate with resulting legal implications proving to be both time-consuming and costly for both parties.
Land and property owners who have telecoms tenants should be assessing what the new ECC means for their rental incomes and their future development value. However lawyers will be debating key points in the courts in the months and years to come, incurring significant costs for both parties long the way. Negotiated agreements will always be a better option. As Mr Churchill said, ‘to jaw-jaw is always better than to war-war’.