Telecoms Update

As with many other Land Agents, much of my time recently has been dealing with the fallout from October’s budget and the need for valuations to assist with tax planning for clients.  Whilst this is the issue at the forefront of most minds, we also need to be aware of what else is taking place and what is looming on the horizon.

As the Government has a drive for improved infrastructure and in particular towards net zero, we are likely to see more compulsory purchase issues arising. In the Northwest of England we already have United Utilities’ biggest ever project, refurbishing the Haweswater Aqueduct, where they now have a preferred contractor and I anticipate they will commence on site within the next 12 months or so.  We have a major upgrade of the A66 between the A1 at Scotch Corner and the M6 at Penrith, whilst we are also likely to experience even more activity in the electricity sector, where the current infrastructure is nothing like sufficient to achieve the target for Clean Power by 2030.  We already have two offshore windfarms seeking extensive powers to bring their power cables onshore through the Fylde in Lancashire.

At the moment however, I am still seeing a lot of telecom mast renewals come across my desk. The 2017 Digital Economy Act brought in a new Communications Code and gave operators extensive additional powers which they are keen to exercise when leases are coming up for renewal.  Our experiences of the negotiations have been varied and very much depend on the operator’s agent. Prior to the new code powers and subsequent case law, rents for rural sites were commonly £4,000 to £6,000 per annum with add ons where the site was shared with other operators.  Rents for such sites are now more like £1,750 to £2,000 with sharing fees now prohibited.

Some agents try to be sympathetic with the new code, whilst others seem power crazed and only want to ram the new code down our throats with threats of court action and inherent costs being used to brow beat site providers. Needless to say, the former tend to get agreements sooner than the latter. It is essential to engage in the process early no matter how tempting it may be to file the operator’s letter with the plethora of unwanted admail we all seem to receive.  One thing to bear in mind is that with a new lease/code agreement, any outstanding liabilities from the old agreement may be left behind, therefore the first matter should be checking that all previous rent reviews have been completed and paid up – I am continually amazed at how many have slipped by without being completed.  Check the mast and all the equipment on it to ensure any sharers have been identified – whilst you may not be able to get additional rent for them in future, you may be able to get some back rent if they have not been paying. On some masts the operator takes their power from the Site Provider’s electricity supply via a sub meter – make sure it is paid up to date.

Finally, to rub a little salt into the wound, for Inheritance Tax purposes the site will not be affected by the new APR/BPR rules – it’s non-agricultural and is likely to be taxed at 40% – likely to be equivalent to several years rent.