Phone masts reform to impact rental income and estate control

14 May 2018

On 28 December 2017, the government introduced the Digital Economy Act which is the biggest change in the mobile phone mast industry in the last 30 years as far as estate managers are concerned.

With the fears of damage to health from radiation emitted from mobile phone masts having for the most part receded in recent years, agreeing to the installation of a mast may have brought the prospect of a valuable source of additional income combined with the hope of better signal coverage. Nobody gets rich from a phone mast overnight but an annual rent of anywhere between £5,000 to £50,000 (depending on where the mast is) has given many landowners a good amount of extra income. When you consider that phone masts are often located in or near a road verge, a corner of a field or the roof of an office, it has been a good way to make money from otherwise unused space.

All of this, however, will change under the new Act. The idea behind it is to give the mobile phone companies greater powers to access land by force and at a lower rent, to cut their costs. In return, they have agreed to spend more money installing extra masts in more remote areas to improve signal coverage although there is no formal commitment to do so. So, under the new rules:

  1. the mobile phone companies are likely to begin serving statutory notices to demand the use of land to install new masts rather than doing things by agreement. If a landowner refuses to cooperate, the phone company may apply to a Tribunal for permission to install without the landowners consent. We are starting to see the first of these notices come through already
  2. rents are likely to be reduced because the new rules calculate rent on a 'no scheme basis'. In other words, you ignore the fact that the land is going to be used for mobile phone purposes at a profit and must assume there is no scarcity of sites. Rental valuation is based only on the other possible uses for which the site could be used, e.g. playing field, agricultural
  3. the mobile phone companies will be permitted to share and upgrade their equipment without requiring prior consent. They may also transfer their sites to other phone operators without permission. A landowner, therefore, has limited control over the site. Once the mobile phone mast is installed, the institution will have no say over which, or how many, companies can use it
  4. the procedure for removing a mast is cumbersome and long. Once a mast is installed, the eviction process is likely to take anywhere between 18 months - three years to force the removal of the mast.

Given that the rules are so recent, it is too early to tell yet how quick the phone companies will be to assert their new powers or how landowners will react, but this will inevitably create a big change in the industry which needs to be borne in mind by institutions with existing masts or faced with the prospect of new ones.

There are options available to educational bodies who end up receiving a statutory notice. If the land is going to be redeveloped, the institution can oppose the notice. In all other cases, land valuations will need to be looked at carefully to see if there is any scope for claiming more rent. More flexible lease terms will also become essential. An institution will not want to enter into a long lease if they are going to receive only a tiny rent. Likewise, lift and shift clauses will become increasingly important to make sure the institution can force the mobile phone company to relocate if the roof of their building needs repairing. An institution will not want to find they cannot repair or redevelop, when necessary, if the income no longer justifies the hassle of it all.

The new rules apply to all types of electronic communications equipment, so it will apply equally to things like broadband cables and signal amplifiers installed by the mobile phone companies on the side walls of pubs and other buildings for example. Institutions with existing masts or who receive a notice would be well advised to act quickly and take specialist advice.

The content of this article is for general information only. For further information regarding the impact of phone masts on rental income and estate control, please contact Dwight Patten, James Robinson or another member of Birketts' Education Team.

This article is from the May 2018 issue of Education Matters, our quarterly newsletter for those in the education sector. To download the latest issue, please visit the newsletter section of our website. Law covered as at May 2018.

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