Tom Brearley
Posted on 9 Nov 2020

Tribunal refines its approach to valuation of mast rents under the Electronic Communications Code

In a ruling that will be welcomed by site-owners, the Upper Tribunal has taken a more nuanced (and owner friendly) approach to setting rents under the new Code.

In Cornerstone v London & Quadrant Housing Trust, it examined in some detail the additional costs and benefits that arise as a result of entering into an agreement to provide a telecoms site. It identified that while the site value in this case was merely a nominal £50, it would not be right to ignore the benefit to the operator of certain services carried out by the owner, nor the burden to the owner of hosting a telecoms installation on his property.

In particular, the Tribunal valued the benefit to the operator of the owner's responsibility for maintenance and insurance at £1,500. It valued the administrative cost to the owner of managing access by the operator's workmen at £1,000. Further value was attributed to the cost to the owner of keeping track of which operators were using the site under the sharing provisions contained in the licence agreement.

The result was that while the site had a nominal value of £50, the annual rental value was 100 times as much at £5,000 p.a.

The Tribunal made it clear that this detailed benefit / burden approach supersedes the more rudimentary approach taken in the case of EE v Islington.  It was also at pains to point out that the ruling was of wide application, concluding its judgment with the following words.

"We would add, for the assistance of parties in other cases, that while each reference must be determined on the basis of the evidence presented to the Tribunal, the evidence we have considered in this case gives us no reason to expect that the market value of a site provider’s agreement to confer code rights over a roof top site on any different residential building will be much more or less than the sum of £5,000 we have determined. … [T]here may be features of a particular building which justify a modest range, but we would not expect variations to be significant one way or the other. The evidence does not suggest that there is much difference between the value of a site on a residential building in Inner London or in Sheffield and we would be surprised if values in other parts of the country were not in the same narrow bracket."

We might then expect further 'ballpark' figures to be set for other classes of site in future, such as agricultural land or commercial property.

Such ballpark figures will be of significant value to potential site-owners and their advisors, as negotiation time should be reduced while rentals may well recover from the initial dip caused by the introduction of the new Code in 2017.