The Mishcon Academy Digital Sessions. Conversations on the legal topics affecting businesses and individuals today.
Emma Macintyre
Hello my name is Emma Macintyre, I’m a Partner in the Property Litigation team at Mishcon de Reya. I’m joined today by Isabel Lich, an Associate in the Team and David Boyne, a telecoms surveyor for the first of two podcasts relating to the Electronic Communications Code. Together we are going to discuss the rights of telecoms operators to install their equipment on any land or buildings and the steps that can be taken by the owners or occupiers of such land or buildings. First let’s recap on the Code, what is it? There has for a long time been legislation in place which allows telecoms providers to be able to place their equipment on sites which are outside their ownership. The policy reason behind that is to allow coverage for telecommunications over as wide an area as possible and that operators are not prevented from putting their equipment on sites to provide that coverage. The Code regulates the legal relationships between landowners and registered telecommunications providers/operators. It gives the operators the right to install or to keep apparatus on land after contractual rights have been terminated. Those are known as Code rights. There was previously a Code in place and had been for some time but that was changed in 2017 so that there were new rules and a new Code. The old Code doesn’t apply anymore although there are some transitional provisions and in this podcast we are going to be focussing on that new Code. The Code provides security of tenure to the operators and under the new Code, the 1954 Act which governs the security of tenure for business tenancies does not apply to any agreements. In this podcast we are going to be talking at times about site providers. The site provider is the occupier who could be the land owner, landlord of the property or a tenant and it’s the site provider who can provide and grant the Code rights. I am going to now talk to Isabel and David about the powers and rights available to the operators.
So Isabel, what are the first steps that an operator is going to take if they want to or think that they might want to go onto land or a building to install their equipment?
Isabel Lich
So the first thing an operator needs to do is establish whether the site in question is suitable for the installation of equipment. To do that they will undertake a survey and the survey then tells them whether this site connects with its other sides that it has in the area or whether there is any kind of elevation issues that would interfere with signal. Ordinarily the land owner of that site would receive a letter from the operator giving notice that they want to come on to the site and if that letter is ignored or no response is received then there will be further letters. There is a Code of Practice that supplements the Code that requires a land owner to provide access within a reasonable time of request and also to respond to any such requests. Although the Code of Practice isn’t binding, should the case go to the Tribunal then the Tribunal might take the parties behaviour in complying or not complying with the Code into account particularly when considering costs.
Emma Macintyre
And when you say land owner, is that a freehold owner of land, a tenant? Who is the person that would receive a letter or any kind of notice?
Isabel Lich
So Code rights can only be granted by the occupier of land, therefore if the tenant is in occupation and the operator wants to buy both the landlord and the tenant then it either needs to enter into two agreements, one with each party or it needs to enter into a tri-party agreement that covers both. The definition of occupiers actually the subject of a case called Compton Beauchamp that is being appealed through the Supreme Court and we expect a decision on that in the coming months but for now that is the position.
Emma Macintyre
Say an occupier, landowner receives a notice, can they refuse access for a survey?
Isabel Lich
So access to survey is a Code right which means that if access is refused the operator can apply to the Tribunal to force access by requiring the landowner to grant what’s called an interim rights agreement, an agreement allowing it to go onto the site to survey. The test that the Tribunal will apply is whether the exercise of the Code right is compensatable in money and whether the public interest in having access to good telecommunications signal outweighs the interest of the particular landowner. If the landowner or occupier refuses to engage it is therefore likely that the operator will make an application to the Tribunal and the hearing could be dealt with quite quickly, as quickly as six weeks and the operator will see to claim costs from the landowner. Costs can be quite substantial, in some cases in excess of £20,000, although the Tribunal has recently been quite critical of parties incurring too many costs and has limited recoverability. When it comes to survey it is very likely that the Tribunal will grant access because the survey doesn’t necessarily reveal that the site is suitable, it is just to establish whether there’s a potential that it could be.
Emma Macintyre
And presumably the disruption from a survey is, is very different from a permanent right?
Isabel Lich
That’s correct the, I mean the survey does not mean that it is a forgone conclusion that kit is actually going to be installed. It is basically a scoping exercise to see if there is the potential there.
Emma Macintyre
Okay, David, how can a surveyor assist in this?
David Boyne
In the first instance the initial letter requesting access will usually suggest to a building owner or a tenant of a building that it obtains professional advice and it is really, really important that this is done. A number of landowners will actually try to do these things themselves and get themselves into a bit of a twist. In the background the operator’s agent will have carried out a detailed assessment of the suitability of the site or the roof and therefore they have got a lot of information at the outset as to how they are going to deal with it. It is important to ensure that any agreement is properly documented and contains the right terms. This is because if the parties simply enter into an informal written agreement allowing the operator to access the property, the operator may be able to argue that permanent Code rights have been created. Now the initial survey the letter will say, ‘we’re just coming to have a quick look’. In the background it won’t be an initial quick look. It will actually be something that’s called an ‘MSV’ or a Multi Skilled Visit and this is a detailed design, well it’s a detailed design consideration used to prepare the planning documents. It will consider antennae locations, feeder routes, the location of cabinets and other equipment, access routes, crane locations, power and fibre routes. This is all done by the operator’s agents but it is really, really important that a land owner or a tenant has someone representing them to understand the initial considerations that are being made in order to prepare a route to consider as to whether it is going to a major, major problem or whether it is going to be acceptable from that side. Now the MSV would normally be documented and our recommendation is that it is documented by whether an interim rights agreements, the terms for an MSV, the legal terms and the written terms are actually over the past three years have now been standardised between landlords or professionally advised landlords and the operators themselves and predominantly it’s access to inspect but it’s a time limited access to inspect. A telecoms surveyor can have the discussions about this and agree the terms on behalf of the landowner/occupier.
Emma Macintyre
It is something that can be done jointly with the landowner or the occupier?
David Boyne
The operators themselves historically over the past thirty years have encouraged the landowner’s agents to be involved in these MSV’s in order for them to highlight areas that where works may be proposed to be carried out by a building owner in a years’ time, two years’ time, adding air conditioning, adding solar panelling etcetera, etcetera. Under the new Code the operators really don’t want what they term as interference of landlord’s agents stopping them from doing what they want to do and designing the perfect site, notwithstanding the fact that that may interrupt a buildings owner’s occupation or beneficial enjoyment of the roof of the property or his site. Therefore they will discourage an agent acting on behalf of a landlord to attend. In our opinion it is essential that they attend and are there at the same time. The operator will not pay for that attendance but it’s really, really important for a building owner to understand what the operator is seeking to achieve in order to minimise the impact to their building.
Emma Macintyre
And is there any reason why the owner of a building or occupier of a building can’t actually carry out its own survey for suitability especially if it’s got a number of buildings in the same area to see whether they, they can think about whether there are particular buildings that might be better suited from either their point of view or indeed from an operator’s point of view?
David Boyne
Again it’s essential that that’s considered by a building owner at the date the application to access their buildings are made. The building owner will have a detailed knowledge about what their plans are for the building, what other ownerships they have, whether they are about to lease out a roof to a drone landing company or do other works on the roof. They’ve got this absolute knowledge which the agents who act on behalf of the operators have no view upon. Their focus is to install equipment on the roof of the property. Their instruction is to install it as in the cheapest possible form, as quickly as possible, etcetera , etcetera and if they don’t have this information or a building owner doesn’t understand this consideration, then there becomes a problem and that then leads to litigation or it leads to a difference of opinion between a landlord and an operator. So it is absolutely essential that a building owner considers some of these wider things to understand how the impact to his building or his suite of buildings, adjacent buildings some of them which may be proposed to be redeveloped or increased in height or additional equipment being brought in so it’s really, really important that they do this.
Emma Macintyre
And Isabel I mean if they were to do that, is that something that would be taken into account by a Tribunal in any application that was made before it?
Isabel Lich
Definitely. The parties views on what should happen will obviously be considered by the Tribunal and also the Tribunal will have regard to the parties conduct so if, if a landowner has offered an alternative roof or has tried to cooperate to find an alternative solution that works for both parties then that will definitely be taken into account on the question of costs.
Emma Macintyre
Okay thank you. Moving on, once a survey has been carried out, is that the end of the matter? I mean is that the end of the procedure, is the operator just simply allowed to go on if they think that the site is suitable for their equipment?
Isabel Lich
The answer to that is no. The operator has no automatic right to install but again the installation of kit is a Code right so if the landowner refuses to give access then the operator can apply to the Tribunal to force access and if the operator is successful then again it will seek costs which can be more substantial than they can for interim rights so in a recent case it was in excess of £500,000. Again that doesn’t necessarily mean that the Tribunal will allow full recovery but it is something that landowners have to bear in mind.
Emma Macintyre
But will the operator definitely obtain an Order or can the landowner/occupier take steps to try and prevent equipment being installed? David are there any practical steps that would be taken by the operator before it reaches the stage where a Tribunal application is being made?
David Boyne
Emma, we at least distinguish between the original survey. In the first instance we would amass the original survey, they are allowed to do this, they are allowed to technically design any scheme that’s there, it’s really, really important for the site provider, building owner, tenant to understand the implications with regards to that. The detail that they are taking under the survey will be to put in place planning design drawings which they will then as soon as they are ready and a lot of the cases at the present time, without reference back to the building owner, they will make a planning application to the local Planning Authority and therefore those drawings need to be looked at as soon as they are available in order to understand the impacts that are there and representations can be made by a building owner, tenant, landlord of the building to the local Planning Authority. Again historically 50% of planning applications made by operators would fail a planning permission. The planning permission regime has now been loosened by Government legislation to promote the local Planning Authorities to allow planning to, to be granted but it’s really, really important that any major concerns or any concerns at all that are made, are made to the local Planning Authority if the scheme does not fit the purpose and reduce costs and suits the occupation for the building.
Emma Macintyre
Planning therefore is, is a sort of first stage that would give a landowner, occupier an opportunity to make representations separate to any opposition grounds that they may have under the Code but it gives that first… a sort of separate and first step that they can take?
David Boyne
It’s really a second step because if the survey is carried out jointly with the building owner’s representative, he will be make representations at that point in time to say, ‘you can’t put your equipment here because there are plans to put new air conditioning in’ or there are other issues whatever it may be and these need to be documented so that if an operator ignores those representations at the survey, this, should it go to Tribunal, can be brought out at that time to say, ‘you were aware of this and therefore you didn’t take account of it, we are not really happy’.
Emma Macintyre
So we are now in a situation where the survey has been done, planning application’s been made, planning permissions been received. Isabel, what are the steps that now need to be taken by an operator if an application were to be made to the Tribunal, what would need to take into account and what reasons can a landlord occupier have to object?
Isabel Lich
So if the operator makes an application that a landowner can put forward reasons why the application should not be granted an example could be that the prejudice caused by the exercise of the Code right i.e. allowing installation of the kit cannot be compensated in money. There was a case called the University of Art where a landowner was redeveloping and successfully resisted the imposition of a Code agreement on the basis that it would not be able to give vacant possession in accordance with the contract they had entered into with the developer and the Upper Tribunal accepted that the prejudice caused by the risk of litigation both with the developer and Cornerstone who was the operator in that case and the resulting stress and uncertainty to the University of the Arts and its employees in combination with the potential reputational damage of litigation just could not be compensated in money, therefore the redevelopment plans were sufficient reason not to grant a permanent agreement. There could also be practical considerations why the kit can’t be installed, there might be solar panels or a drone landing site or storage or another use of the proposed site which David also just mentioned, if there’s air conditioning that will be installed then you can bring those to the Tribunal’s attention.
Emma Macintyre
But in a large number of cases you may well find that as a landowner or occupier the operator is able to obtain an Order. If there is no ground for refusing it or indeed if the landowner occupier is prepared to agree, David what kind of terms are included in an agreement?
David BoyneIn the first instance the operators are sending out generic standard terms right across the industry and they are sending these out at very early stage to a landlord. They are exceptionally operator friendly. In general terms they do not reflect the individuality of any particular building or occupation or a landlord’s future consideration. So the terms are standard and generic and from a landowner’s point of view, are very, very hard. As an example the term is typically demanded, requested as 15 years without break and in a lot of circumstances especially central London with tower cranes going up, a landlord may have a consideration that in 5 years, 10 years’ time there is to be a redevelopment of the building and therefore it is absolutely essential that this is considered at day one before any agreement is written because if an agreement is for 15 years without a landlord’s break clause then that’s it, it’s 15 years and they cannot redevelop that building for that period of time. So these… there’s a lot of minutiae in there, 24/7 access is another request and demand from the operators without control. The circumstances for arguments sake of an operator putting equipment on a school building will need to be controlled very carefully with regards to for example, safeguarding because you can’t just allow people on to a site because it breaks the legislation in connection with the operation and running of things like schools. The valuation is something that needs to be considered in the compensation as well. The consideration rents as you’d have it, is much lower than the old Code typically it’s now an offer of between £1,000 and £5,000 per annum as opposed to historic rents of between £10,000 and £40,000 per annum. There is another part which is compensation which needs to be thought about very, very carefully. It’s all supposed to be cost neutral under the Government legislation to a landlord and in general terms the operators wish to reduce down their outgoing costs, annualised costs in addition to rents to as low as possible and therefore there will be discussions that will need to be had with regards to the actual costs from that side. There may also be other terms depending on the landowners, occupiers long-term plans which include break rights, lift and shift clauses but these will be touched upon in the next podcast. Again with any agreements prior to occupation, the operators will seek to put in place consensual terms and suggest that these are consensual terms but they are really hard with regards to negotiation what they will accept and what they will not accept. It’s exceptionally important to consider the minutiae of the details of any agreements because it’s what’s not written that will come back and bite a building owner in the future.
Emma Macintyre
And Isabel is there anything else that generally landowners or occupiers should be aware of?
Isabel Lich
Yes so the, the unwritten terms that David is referring to for example, there’s an automatic right for operators to assign, upgrade and share their equipment under the new Code so historically the agreements would limit say the amount of equipment or the size of the equipment and also specify that operators couldn’t share with other operators or could only share to a limited extent and that is prevented by the new Code. The other thing obviously as we have already touched upon is the Code does grant security of tenure or a form of it which means that in order to get rid of the operators it’s not just enough to terminate the agreement, you have to go through the procedure that is specified by the Code but we will talk about that in more detail in our second podcast.
Emma Macintyre
Well I think that brings an end to the discussion on the rights of operators to put their equipment on land. If you have any queries or you would like advice then you will be able to find our details on our website at www.mishcon.com. Please do join us for our next podcast in which we will cover the grounds for removing a telecoms operator from a site. In particular when the landowner wishes to develop its site. Meanwhile, thank you for listening.
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