How important is your phone?
Thursday, August 1, 2019
Thursday, August 1, 2019
In the world of commercial property most things don’t change very quickly, we’re still reeling from the arrival of the Land Registration Act 2002 and discussions about CVA’s stopping landlords getting rents (the method used by some of the big high street names) are still only talked about in hushed voices in dark alleys. So the new Electronic Communications Code 2017 is still modern news and most surveyors lawyers and landowners are at best coming to terms with it and in most cases hoping that they’ll wake up from the nasty dream after clicking their heals and saying “there’s no place like home”!
By way of background 25 years ago mobile phones arrived. They needed aerials to operate and Landlords with rooftops hitherto unused woke up to a bonanza leasing their unused space for untold fortunes. Key locations were attracting rents in the 10s of thousands for previously worthless areas. Farmers fields, previously only suitable for the hardiest of deep, were suddenly commanding rents in the thousands for small corners near important roads.
There were some legal issues that landlords complained about, rights of renewal were a bit vague, and you didn’t need to be the landowner to suddenly be encumbered with them, just the occupier, but from a Landlords point of view, the key for most was they got paid for renting out land or space they’d previously received next to nothing for.
For the mobile phone operators they worked ok with it but they struggled to get fair play from landlords in their view and were pushed into paying higher and higher rents for pieces of land they only needed a mast on so that they could tick boxes for government requirements, however with the proposed roll-out of 5G and the anticipated arrival of automatic self drive vehicles, there was a real concern that they’d have to spend ridiculous amounts to secure sufficient, suitably located, sites.
The new code came in to make a level playing field and make it easier for the telecoms companies to do that, but in turn to make it easier for landlords to get rid of masts. One of the key problems for landlords though is that the rent levels are not set by references to other deals for phone masts. Now the rent is set by reference to what other utility providers would pay for, say, electric cables or a water pipe……virtually nothing!
This has led to landlords looking to get their leases renewed getting offers for sites, previously worth £5,000 per annum, in the region of £10 to £100 per annum. It has been fuelled by a couple of cases which have been to the lands tribunal who have agreed that such low figures are in the right ballpark.
There is an army of specialist solicitors and surveyors trying to improve on this but its an uphill battle though there are some small victories being won. At the moment the advice to small landowners who have a lease not yet renewing or which has expired and is holding over is to do nothing in the hope that someone with deeper pockets wins some cases and sets a slightly better precedent. Better agreements are being negotiated with a specialist surveyor and legal teams but on a non-disclosure basis, at some point, however, the word will come out when some of the biggest landlords, like the UK government or local authorities, for example, get pushed into an unaffordable corner.
At the moment however, don’t bother looking for the ruby slippers as nobody knows where they are.