The Electronic Communications Code 2017 ended the double protection conferred on operators, thanks to the interaction between the Landlord and Tenant Act 1954 and the previous Code. But the 1954 Act remains relevant where operators are in occupation after the contractual expiry date of a tenancy, which has then been continued under the Landlord and Tenant Act 1954.
In such cases, the operator must apply to the county court for a new tenancy under the 1954 Act. But any new tenancy entered into for Code purposes will be renewable under the Code, and the 1954 Act will no longer apply: Cornerstone Telecommunications Infrastructure Ltd v Ashloch Ltd and another [2019] UKUT 338 (LC).
Vodafone Ltd v Hanover Capital Ltd [2020] EW Misc 18 (CC); [2020] PLSCS 162 is the first case in which the court has had to address a claim for the renewal of a 1954 Act tenancy over a site since the introduction of the new Code. The litigation concerned a 22.5m mobile telephone mast with associated telecommunications equipment cabinets. Vodafone occupied the site under a five-year lease, granted in 2008 in return for a premium of £10,000 and a peppercorn rent. The parties had agreed almost all the terms of the new tenancy – but not the rent, the length of the term and the details of a tenant’s break clause which was to be included.
Section 34 of the 1954 Act requires the court to determine the rent at which the holding might reasonably be expected to be let in the open market by a willing lessor on the terms of the tenancy. So, having decided on a 10-year term, with a break clause (which did not require Vodafone to give vacant possession) exercisable on six months’ notice expiring on the fifth anniversary of the term and at annual intervals thereafter, the county court moved on to consider the rent payable under the new lease.
The court reasoned that, in the hypothetical negotiation, the hypothetical tenant would be a Code operator because the only permitted use of the site under the terms of the new tenancy was for Code purposes. Furthermore, both parties would be aware of how the Code operates.
The site must be assumed to have been exposed to the market for a reasonable period. And the judge was satisfied that it would be in demand, given that Vodafone shared the mast with other operators. Demand for a site enhances a landlord’s bargaining position and the hypothetical landlord would refer to sums paid under the old Code as a measure of the value of sites to operators and would be able to negotiate a comparable return, pushing up the rent to reflect the value of the site to the successful operator.
However, this may not be true for sites that satisfied the needs of only one operator, that were of no interest to competitors. In such circumstances, negotiations would be conducted against the background of the “no network” assumption in paragraph 24 of the new Code, which might cause the parties to agree a modest rent reflecting the value of the site to the owner instead.
In this case, the judge considered that the hypothetical willing parties would agree an annual rent of £5,750, which included a 5% adjustment for the absence of a rent review clause and an annualised figure to cover Hanover’s reasonable legal and valuation expenses in connection with the grant of the new lease.
Allyson Colby, property law consultant
