The Electronic Communications Code 2017 (ECC) has been a hot topic for some time. We caught up with one of our surveyors in our telecoms team, Henry Mawhood, to explore some of the reasons why it has been seen by some as one of the most contentious pieces of legislation within property law in recent years.
The code was brought in to allow operators to acquire more sites and digitalise the United Kingdom at a faster rate. However, the operators have used the code and the legislation to focus their attention on renewing existing agreements to save the shareholders money and make more money as a result. Doing this has a damaging effect on the socio-economic environment we live in within the UK. Operators have suggested that originally, they were having to pay over the true value of a site.
We will not see the effects on the UK economy until perhaps 2025-2030 when the renewals start to be fully enforced. Local authorities will be directly impacted by having revenues from these sites cut by more than 50% and perhaps up to 90% during this period. Lost revenue will need to be found elsewhere, which could be by increasing council tax charges.
Some operators with an agreement already in place often decide to renew their agreement within 6 months of it being in place as they have identified opportunities to save money. They will then propose rent reductions from £6,000 pa to £1,200 pa.
This not only confuses the landlord but also means that the code has allowed operators to have unlimited rights over their land. The operators make it difficult for the landlord to have a redevelopment clause. This is a very different situation from that 10+ years ago when the operator first acquired the site.
If the landlord does not respond promptly, the operators have solicitors ready to enforce tribunal proceedings to push the renewal through. This can almost be seen as a bullying tactic, but one they do rely on from time to time to show they are prepared to take this drastic action. It can cost the operator hundreds of thousands of pounds to save £4,800 pa, but they intend to set a precedent across other the sites they wish to renew or acquire.
The fees which the operators are paying agents and solicitors for dealing with the renewal of these sites outweigh in some instances the site’s ‘value’ across the term. The operator will offer to contribute to landlord fees, but this will not necessarily cover the whole cost. This can often mean different landlords have to cover the cost of the renewal process, the landlord could be a charity, a private landowner or any other entity and these situations can be difficult to explain.
In any case, the tribunal appears to support the operator. However, this is what the tribunal ultimately are making decisions based on. The tribunal asks agents to use a table to decide a site’s ‘value’ and does not consider the size and site-specific characteristics of a case. The whole market is broad-brushed which allows the operators to enforce drastic cost reductions.
Ultimately it is the landlords that are paying the price. It can be a complicated process for landlords to have telecoms on their land. It involves not only having large amounts of equipment, but there will be different contractors involved. If there is an issue. it takes time and money to resolve. It can seem that the sites are no longer worth having for the little amount of return they receive. The telecoms sites themselves are over a proportionally small area of their land but the inconvenience caused by having that site is not worth the rental income it achieves.
My question remains, if site values are being reduced by 75% then why are phone bills not being reduced by the same amount?
Our team act for more than 6,000 land and property owners across the UK who have telecommunication radio base stations, radio towers, rooftop installations and mobile phone masts on their land and buildings.
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