Tribunal sets approach to rural mast rents

The Upper Tribunal has set out three stages to take when settling telecoms mast rental agreements, in a decision which could shift the backlog of disputes.

Since its introduction in 2017, the Electronic Communications Code has caused widespread contention between landowners and operators as they have tried to agree on rental terms under its new provisions.

“A recent case, involving a telecoms mast in woodland on a rural estate in the South Downs National Park, has seen the Upper Tribunal set the rent at £1,200 per year,” explains Kate Russell, policy adviser to the Central Association of Agricultural Valuers (CAAV). “The landowner and infrastructure provider couldn’t agree on site sharing, rights to upgrade and rental value, so the Upper Tribunal agreed to impose the rights which were fundamental to the tenant’s business model.”

The Tribunal adopted a three-stage approach to the rental value, which took into account the particular characteristics of the site.

“The three-stage approach can now be used to help landlords build rental figures for their particular site,” says Ms Russell. “The message from the Tribunal is clear: Landowners have to make a careful assessment of the benefits and burdens imposed by an agreement on their site and provide evidence to support their arguments,” she says.

The three-stage approach comprises:

Stage one:

Assess any alternative use value of the site. “For the small South Downs woodland site in the middle of a rural estate it was £100 per year, but where a site has genuine prospects for a more valuable alternative use – such as in a yard suitable for outdoor storage – the landlord should provide evidence to support a higher figure.”

Stage two:

Consider the additional benefits which the agreement gives to the tenant. In this case, they included a right to enter the landlord’s adjoining property to carry out necessary works which were valued at £150 per year – on other sites this sum might be more or less than that, depending on the circumstances. The tenant’s right to a rolling break clause after five years was agreed to be worth £100 per year or 5% of the rent. “This is a common term in telecoms agreements which is of real benefit to the tenant,” says Ms Russell.

Other benefits which should be paid for include the right to keep the existing mast, to maintain connections to an electricity supply, and to carry out pruning or trimming of the landlord’s trees. In total the Tribunal awarded £600 for this element, but in other circumstances the parties might produce evidence to support a higher or lower figure.

Stage three:

Consider the adverse effects on the landlord. “In this case the Tribunal found evidence of the impact of third-party access to the heart of a rural estate, occasional use of a generator (with associated noise and vehicle movements to re-fuel), concerns over the potential impact of future upgrading and loss of amenity,” she explains. It awarded £500 per year to reflect these issues. For other sites, an assessment of the impacts should be undertaken to reflect the circumstances.

The level of rent imposed in the South Downs case will be disappointing to some landlords, admits Ms Russell. “The Government has said that it expected to see rents come down and I think that most landlords have accepted that principle. Some will be surprised to see it as low as £1,200 per year, but it’s considerably more than the offers of less than £100 per year which operators were originally making” she says. “However, the Tribunal suggested that where terms were agreed between the parties, rents might twice as much as where it imposes terms, to allow for an element of incentive and to avoid the risk and cost of going to the Tribunal.”

Landlords should also remember that if they are negotiating a consensual agreement, they should reserve the right to make future compensation claims, as there is no statutory opportunity to do so at a later date - that will only arise where the Tribunal imposes an agreement, says Ms Russell. “Taking advice from an experienced valuer can help the landowner reach a suitable agreement, but if the parties can’t agree then seeking dispute resolution could help to resolve matters.”