Lower rents under The Electronic Communications Code (“the New Code”) may be at risk because of pre-existing landlord and tenant act legislation. Telecommunication operators are likely to still have to pay a traditional rent when renewing tenancies. The recent judgment in CTIL v Ashloch Limited and AP Wireless II (UK) Limited has clarified which legislation applies when an agreement needs renewing. The New Code came into force in December 2017 but for any protected tenancies under the Landlord and Tenant Act 1954 (“the 1954 Act”), the 1954 Act prevails.
The judgment provides that where you have a protected tenancy under the 1954 Act already running when the New Code came into force, the 1954 Act termination and renewal procedures will prevail over the New Code. The implication of this is that landlords of protected tenancies may now be able to rely on the rent assessment mechanism in the 1954 Act at tenancy renewal, instead of having to accept a potentially much lower rent under the New Code. If you have an agreement that fits this criteria, then there is a strong argument to support that rents should at least remain at status quo.
Tenants renewing under the 1954 Act procedures may want the powers to assign, upgrade and share (which are automatically granted in New Code agreements) in the new lease. When assessing rent under the New Code, it has to be assumed that these powers do not apply. However, under the 1954 Act procedure regard must be had to all of the terms of the tenancy. From a valuation perspective, this provides an argument to support higher rents being secured but whether or not this will translate in the market is unknown. We expect counter arguments to be made and these have not yet been tested.
The salient point we take from the latest decision is to establish the arrangement under which the operator is in occupation before entering negotiations. Not doing so could severely prejudice your position.