Jeremy's Blog 27/8/2020: Valuations under the Electronic Communications Code
With the long, fraught arguments over telecommunications masts, the last fortnight has doubled the number of Tribunal decisions on valuation, developing a picture of what Tribunals consider to be the main arguments. CTIL v Fothringham (in the Lands Tribunal for Scotland) follows EE v Islington in considering the rent for a new Code agreement. Vodafone v Hanover considers the rent on the renewal of a lease protected by the Landlord and Tenant Act 1954 (CTIL v Ashloch having decided that such renewals are under the Act, not the Code). The Tribunal’s comments in CTIL v Compton Beauchamp cast light on methods of tackling the Code’s statutory valuation requirements.
While the eye is naturally drawn to the rents awarded in the three cases that did so, this note offers some brief initial observations on the underlying messages which may frame future work.
One understanding is to see these decisions as about value, not price. The negotiations before December 2017, almost untouched in practice by the old Code, may have created a sense that a 15m rural mast was likely to have a rent of £5-6,000, more or less a standard price. These Tribunal decisions are more specific to the site and circumstances of each case: changes in those may give different figures.
The agreement’s terms have to be settled for it to be valued. Its handling of the site provider’s costs and any compensation for potential loss or damage is likely to matter. The more that the site provider has recourse under the agreement (or a Tribunal awarded the Code agreement), the less the issue might for the rent. Hanover also turned on the 10 year term and lack of a rent review provision.
The nature of the market for the site matters. That is not just its existing or alternative use value; Hanover shows that evidence of competing interest from operators could be relevant.
The Tribunal is interested in the nature and behaviour of “willing” parties, especially a “willing seller”. Evidence of the impact on a site provider of an operator on site is potentially material for both Paragraph 24’s valuation of the agreement between the parties and a market rent on renewal. The operators’ “pro rata” approach has been consistently rejected, notably in Compton Beauchamp and Fothringham; deriving a nominal value from large transactions is not seen as credible.
While the mists might seem to clear a little, new cases see increasing contention over experts and appeals are expected on Compton Beauchamp and Ashloch. We might not be clear of storms.