Government publishes consultation on Regulations about how rent is calculated under the Landlord and Tenant Act 1954 for agreements with Code operators
The rights of telecoms operators to install and keep apparatus on land are regulated by the Electronic Communications Code (“the Code”) which was brought into force in 2017. Rather than assisting in the roll out of 5G and improving connectivity the Code has caused stagnation in the market and resulted in an unprecedented amount of litigation. Part of the reason is that rent is calculated under Code agreements on a “no network” basis, which excludes any value generated by the use of the land for telecoms purposes.
One of the other matters that the new Code sought to address was the dual protection between the Landlord and Tenant Act 1954 and the Code. The transitional provisions provide that if a lease is protected by the 1954 Act, then on renewal the Act and not the Code will apply. That has created inconsistency in the market as the rent for a renewal lease under the 1954 Act is assessed on a market valuation model and not the no network model. In addition, under the 1954 Act the Courts can assess an interim rent which is not provided for in the Code.
The Regulations being bought in are designed to ensure that the method for calculating rent is more consistent across the UK. They include saving provisions to ensure a clear transition between the two regimes and to minimise any litigation over which regime applies. It is intended that these provisions will not apply to tenancies in respect of which a notice has already been served and the date specified in the notice is before the date on which the Regulations come into force.
With regard to the issue of interim rent, the concern is that once these provisions are bought into force, they could lead to landlords needing to repay any rent received over and above the rent calculated on a no network basis. Therefore, it is proposed that this should not be the case for any rents received as a direct consequence of these provisions up to the date on which they come into force.
The consultation is a technical one, which means that views are not sought on the aims or principles of the Regulations. It is only whether the saving and transitional provisions give effect to those aims. The consultation is open until 2 July 2025. The government expects to issue a response to the consultation later this year and the Regulations will be brought into effect shortly afterwards.
When commenced, the changes will alter the financial terms on renewal of relevant leases. They do this by replacing the valuation frameworks contained in the 1954 Act and the 1996 Order with provisions that mirror those in the Electronic Communications Code. This will ensure the method of calculating rent for renewal agreements conferring Code rights is more consistent across the UK[footnote 2].
