The modern regime for valuing rent in a telecoms agreement has now been in force across the UK for just over five years. Time flies when you're having fun!
Previously, parties had been free to agree the rent payable by an operator to use land. Site providers were often said to be able to negotiate higher rents accounting for an operators’ necessity for the site, and there would be additional site sharing fees and additional rent for upgrading.
Fast forward to today, although parties may agree a higher contractual rent or premium, the “no network” assumption in valuation has greatly reduced rents site providers may command and, there is a prohibition on site sharing fees and payments for upgrades and assignment.
Case law has been helpful in establishing some standard rents for typical scenarios. In particular, judgment in EE Ltd & Hutchison 3G UK Ltd v Affinity Water Ltd has established what's known as the "Affinity Water table" for some of the valuation comparables.
Affinity Water Table
| Decision | Type of property | Annual consideration |
| CTIL v Forthingham (Lands Tribunal for Scotland) | Rural, estate location | £600 (£1,500 in year of installation) |
| On Tower v Green | Rural, adjacent to housing | £1,200 |
| Marks & Spencer | City, department store/offices | £3,850 |
| London & Quadrant | City, residential rooftop | £5,000 |
The Tribunal considered that the rental value for a hypothetical lease of a water tower would likely fall between the value of a green site and an office or commercial building. It therefore awarded £3,300 per annum which included £1,500 per annum for the burden of Affinity managing EE's access and £350 for the benefit of the tower being maintained by Affinity which removed the need for EE to maintain its own mast.
The Tribunal noted that, due to the emergence of patterns, it was becoming sufficiently clear that it would rarely be necessary for parties to adopt the lengthy valuation approach.
While the table is helpful to professionals and practitioners alike – as is the judgment itself with guidance for valuation exerts – industry does not yet enjoy comparables for all scenarios, site types and unique terms.
If you have any concerns or questions about negotiating telecoms agreements or valuations under the ECC regime might impact you or your business, please do not hesitate to get in touch with our Real Estate Disputes team or your usual Brodies contact.
