Friday, December 15, 2017

Review mast agreements ahead of radical reforms

November 30, 2016 by  
Filed under News & Business

Mobile communications mast/antenna atop a tall building

Farmers with a mobile phone mast on their land are achieving deals that pay an average annual rent of £6,029, according to Strutt & Parker’s 2016 Telecommunications Survey. 

The figure is well below the average claimed by telecoms operators – and Strutt & Parker says it is likely to fall still further once a new telecoms code is introduced next year. This makes it important to  to negotiate any lease reviews or terminations before the new regulations kick in.

Site providers who leave it until next year will find themselves in a much weaker position, says the firm. Negotiating a new lease or agreement now will also secure a rent based on market value rather than compensation, which will be the case going forward.

The survey shows that the five-year rolling average rent for greenfield site deals is £6,022/yr – although many of the more rural sites are well below this level – considerably less than a survey carried out by Deloitte on behalf of the mobile operators which put it at £7,506.

Unrestricted rights

Strutt & Parker telecoms specialist Robert Paul said: “It has become clear that agents for operators are approaching landowners across the country seeking site leases on very operator-friendly terms and in some cases offering rents of just £3,000 and demanding unrestricted rights.”

Operators have claimed that landlords are effectively holding them to ransom and have unfettered power. But Mr Paul said he had found little evidence of ransom in the market place. “They also claim that average rents stand at £7,506. Not so, apparently.”

Operators have also maintained that the height of a mast is not a factor in rents, but Mr Paul said analysis of transactions over the past five years showed that rents were indeed higher for taller masts, with the average greenfield site rent for a mast in excess of 30m more than £8,000/yr.

All this makes it important to take professional advice before agreeing to anything – especially given the likelihood that the new telecoms code likely to come into force in spring 2017 could mean radical changes for mast rents.

Much lower rates

Currently, site providers and operators were free to negotiate a market rent, said Mr Paul. But the bill would end this practice and landowners would instead be paid on the basis of land value, regardless of what use it was to be put. This was likely to be at much lower rates.

“Potentially, operators will be able to use break clauses to bring existing leases into the new provisions. I cannot emphasise enough how important it is to review terms now to ensure landlords are in the strongest possible position.”

He warned: “Anyone thinking about renewing, terminating or reviewing a lease should do so immediately in order to make sure terms are agreed under the current code. The process normally takes six months and the new code is likely to come into force in the spring.”

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