Simon Bailey highlights the sometimes surprising problems encountered by occupiers and landlords when dealing with wayleaves, and offers advice on how best to deal with them
If you were to ask any occupier in 2016 their top five concerns when looking for new space, one is sure to be access to a high-speed internet connection. The commercial real estate market has seen a rapid growth in technology, media and telecommunications (TMT) occupiers in urban areas over recent times and there is no sign of this letting up any time soon. While of course TMT occupiers are far from alone in putting a state-of-the-art internet connection near the top of their wish list, it is often absolutely vital to these businesses not only that a connection is available but that it is in place from the moment they move in.
Many occupiers often, quite fairly, assume this process simply involves signing up with their chosen provider and arranging an installation date as customers would with a home broadband supplier. However, the reality is often very different. The process frequently involves additional documentation, further approvals from landlords and discussions between the supplier and landlord, with inevitable implications for costs and timing.
Occupiers can assume, if there is a right in the lease to install telecoms equipment, this is the “silver bullet” that will circumvent the need for any further approvals for these works. However, they should be aware that such rights are normally subject to separate landlord approval as the works will involve areas outside the premises demised under the lease.
Such approval will, depending on the nature of the works, come in the form of a licence for alterations and, if a telecoms supplier is installing its own equipment (which is normally the case), a wayleave agreement.
A wayleave agreement in this context is a contractual arrangement between a telecoms supplier and the landlord under which the landlord grants the supplier rights to install, maintain and use telecoms equipment. The agreement often contains other provisions, such as those dealing with bringing the arrangement to an end and what happens if the landlord wishes to carry out development works. When entering into such arrangements there are a number of issues that should be considered by both landlords and occupiers.
Landlord concerns
Landlords should be aware that when allowing telecoms suppliers to install equipment on their land or buildings these suppliers gain certain protections under the Telecommunications Code 2000 (“the code”). The primary protection is the ability to retain the equipment on the land unless the landlord complies with certain notice procedures for the equipment’s removal. It should be noted that such provisions cannot be expressly excluded by separate agreement.
Under paragraph 21 (if an agreement has come to an end) or paragraph 20 (if the landlord requires the removal or alteration part way through an agreement) of the code landlords must serve a notice on suppliers if they require removal of the equipment. While on the vast majority of occasions a practical arrangement can be agreed as to the relocation or removal of such equipment, suppliers have the ability under the code to resist such removal by serving a counter notice within 28 days of the original notice on the owner of the land. If such a counter notice is served and the matter cannot be resolved by negotiation then court determination will be required, with obvious time and cost implications, which could have a significant impact on development plans.
Occupier concerns
Occupiers should prioritise their telecoms arrangements and present their plans to landlords at the earliest possible opportunity, if possible at the outset of lease negotiations once heads of terms have been agreed. This will allow as much time as possible for the necessary documentation to be negotiated between the landlord and supplier and arrangements to be put in place in parallel with the lease. Despite having the best intentions, suppliers’ wayleave departments are often overstretched and under substantial pressure owing to the number of applications across the UK and this can result in significant delays.
Occupiers should also ensure that their own agreement with suppliers provides adequate protection should suppliers cause damage to the property, as landlords will often require direct contractual protections from occupiers.
Finally, occupiers should also budget for the fact that the landlord will require their legal and surveyor’s costs in approving the works and entering into the relevant documentation to be met by the occupier. Such costs should be agreed as early as possible to avoid uncertainty.
A standardised approach?
One frustration that is widely and equally shared between occupiers and landlords, and one of primary reasons negotiations can sometimes appear disproportionate to the works involved, is that each supplier has its own preferred form of wayleave which often does not include some of the provisions landlords require. Over the past few years institutional landlords with substantial portfolios and landed estates have each agreed their own forms of wayleave with suppliers. This helped to improve the efficiency of the process, but there are still many occasions where discussions prove more challenging and time consuming.
In a bid to address these frustrations, the City of London Law Society Land Law Committee has joined forces with the British Standards Institution and Central London Forward (a sub-regional group representing seven central London boroughs and the City of London) to prepare a standardised form of wayleave that can be used by all telecoms suppliers for the majority of installations. The draft is currently going through a consultation process and it is to be hoped that it achieves the correct balance for all stakeholders, opening the door to a much more user-friendly and efficient process.
As it stands, however, landlords should understand the potential implications of allowing the installation of telecoms equipment on their land and, for occupiers, the message is very much to get your applications in order as early as possible to give yourself the best opportunity of a stress-free move.
Simon Bailey is an associate at global law firm Norton Rose Fulbright
