The New Electronic Communications Code: Key Changes
With the Digital Economy Act 2017 having received Royal Assent on the 27 April 2017 we have now entered a period of waiting for the implementation of the New Electronic Communications Code (the ‘New Code’). Designed to promote investment for broadband and mobile connectivity the benefits to users are clear, but what about the position of the landowner? With no ability to contract out of the New Code landowners need to be aware of the changes.
Firstly, and arguably most crucial, is the change to the calculation of rent and compensation payments. The ‘open market’ value is now assessed on the basis of what the land is worth to the landowner, rather than the operator. The special value of the equipment to the operator is therefore ignored which will inevitably suppress rental and compensation payments.
In addition to the initial rent, historically landowners were able to collect royalties and licence fees in circumstances where the operator upgraded the apparatus or shared occupation. This will no longer be possible under the New Code. Any lease will be void to the extent that it prevents, limits or imposes conditions, including payment of fees, in respect of upgrading apparatus, sharing occupation and even assignment.
Due diligence for the purchase of land will also now be more important than before. Leases granted under the new Code will be capable of binding a landowner’s successor but they do not have to be registered with the Land Registry. This means that there will be nothing on the landowner’s title register to identify the lease. Non-registration paired with an ability to share occupation and assign the lease will mean that it is ever harder to keep track of who is, or should be occupying your land.
One welcome clarification to come from the New Code is confirmation that the telecommunication leases fall outside of the scope of the Landlord and Tenant Act 1954 which previously had the ability to provide security of tenure to an operator. This made ending the lease on expiry of the term particularly difficult for the landowner.
The changes will no doubt be influencing operators’ decisions to delay negotiations for expiring leases or even to take shorter leases in the hope that they can then rely on the New Code. Landowners need to act now if a telecommunications lease is coming to an end to ensure that they can avoid the detrimental changes.
Katy Moss is a solicitor in the Property department at Barker Gotelee Solicitors in Suffolk.
(A version of this article appeared in the East Anglian Daily Times on 15th August 2017.)