Important Information For Landlords With Telecoms Leases: New Electronic Communications Code in force from 28th December.

The Digital Economy Act 2017 (Commencement No 3) Regulations 2017 bring the new electronic communications code into effect on 28th December with some significant changes for landowners to be aware of.

The new code will apply to existing agreements subject to some complex transitional provisions so it will affect you even if your telecoms agreement has been in place for many years.

In general the new code is like the old in that there is no guarantee that an owner can obtain vacant possession at the end of the agreement.  An owner who doesn’t want to enter into a code agreement can have the rights forced upon them by a court order.

By way of reminder the main differences between the old code and the new are:

1. A fall in rents owing to a different valuation procedure.  When valuing the land you assume that there is no operator who wants to use the land for electronic communications services.  The government’s view is that the owner ought not to have a “a share of the economic value created by very high public demand for services that the operator provides”.
2. The operator can upgrade equipment on site and share occupation of the site without the owner’s consent.  The operator can assign a lease without the landlord’s consent though the landlord can require the assignor to give an authorised guarantee agreement in respect of the assignee.
3. The agreement must be in writing.  Both parties must sign it and the agreement must set out the length of the contractual term and any contractual notice period.
4. There is no statutory “lift-and-shift” provision.  However, the agreement can contain a contractual provision.
5. A landlord is not bound by any agreement into which their tenant enters unless the landlord agrees to be bound.  If the operator does not remove the equipment at the end of the agreement, the landlord must obtain a court order compelling it to do so.  This is so even if the landlord is not bound by the agreement.
6. The Landlord and Tenant Act 1954 does not apply to code lettings.
7. Code lettings have security of tenure similar to the 1954 Act but you cannot contract out of the Code

It will be some time before we can assess the impact of the changes to the electronic communications code but, as anticipated, it is operator friendly and careful consideration should be given by landowners before entering into any agreement which may be caught by it.