As reported in our earlier article “Telecoms: another top of the scales in favour of operators”, the Product Security and Telecommunications Infrastructure Bill is currently going through Parliament. The Bill has been through the House of Commons, has undergone its second reading and Committee stage in the House of Lords and is now awaiting Report Stage, likely to take place in September.
There are two particular areas of amendment being debated, which are likely to be of interest to landowners. We focus on these and also address some of the imbalances proposed by the Bill, whilst remaining mindful of the need for a quick and efficient roll-out of infrastructure.
The initial draft of the Bill only made it optional for operators to consider using Alternative Dispute Resolution (“ADR”) before making an application to court. The Lords are now considering an amendment to make it mandatory for operators to engage in ADR before threatening to take a landowner to the tribunal for an agreement to be imposed.
This amendment is being tabled to try to address the imbalance between the apparently limitless resources of operators for dealing with disagreements in the tribunal, and landowners, who often do not have the means to resist such claims. The intention is to try to move away from the attritional conflict currently dominating the tribunal, especially now that case law has developed around the Electronic Communications Code (“the Code“), which could make ADR a feasible option.
Although in its 2021 consultation the Government stated it did not intend to revisit the statutory valuation framework introduced by the Code, the provisions introduced by clause 61 of the Bill seem to do just that. This clause amends the basis for rent assessment of Code sites, on the renewal of a subsisting agreement under the Landlord and Tenant Act 1954 (“1954 Act“), to import directly the Code’s valuation provisions. This will mean that existing long-standing leases, which were freely negotiated between willing participants, will likely see demands for dramatically reduced rental values. The Government’s argument for this is consistency in valuation across the ways in which Code Rights can be granted; whether by a renewal under the 1954 Act or by way of a new Code agreement.
As predicted by the Law Commission when the Government was looking to implement the Code, the dramatic fall in rents offered to landowners has resulted in a corresponding reduction in the number of new agreements reached between landowners and operators and has therefore not sped up the roll-out of digital infrastructure as intended.
If this were to apply to 1954 Act renewals, as well as to new agreements, it will neither encourage harmonious relationships between landowners and operators, nor will it help the intended roll-out. As a result, it has been argued in the House of Lords that renewal agreements under the 1954 Act should not be brought under the Code but should remain under the 1954 Act, to preserve existing property rights and to try to reintroduce the collaborative relationships, which were undermined by the 2017 Code amendments. An alternative amendment proposes that, if renewals are to be brought under the Code valuation system, there should be a limit in the reduction of rent sought.
Although the Bill still has some way to go before becoming law, these proposed amendments, which had cross-party backing in the Lords, should give landowners some comfort that a balance is being sought between their property rights and the ongoing need for a quick and efficient roll-out of digital connectivity across the country.
For more information, please contact Dani West or Helen Hutton.