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The valuation criteria and assumptions under the new Code - a landmark decision on the imposition of terms under the new Electronic Communications Code

  • United Kingdom
  • Real estate

25-02-2019

EE and Hutchison 3G sought rights under the Code to install and operate electronic communications apparatus on the rooftop of a block of flats owned by the London Borough of Islington (“LBI”) who objected to the grant of Code rights.

The Tribunal was asked to address the following points:-

  • Whether the Operators were entitled to a Code Agreement in the form of a lease;
  • the terms of the Code Agreement to be imposed;
  • and the consideration and compensation payable under the Code Agreement to be imposed

The Tribunal decided:

  • It did have the power to impose a Code Agreement in the form of a lease. The Code contained no express restriction on the type of agreement by which Code rights may be imposed.
  • As regards the assessment of consideration payable under a Code Agreement the Court applied paragraph 24 of the Code which makes provision for the determination of consideration. LBI had contended for consideration of £13,250 per annum. The operators offered £1 but subsequently increased the proposed payment to £2,551.77 per annum. The Tribunal determined consideration at £1,000per annum but set consideration at the level of £2,551.77 per annum offered by the operators.
  • LBI’s entitlement to compensation for its reasonable legal and surveying fees and for loss and damage caused by the installation of the apparatus were also considered by the Tribunal, but no order made.

Key points:

  • This is the Tribunal’s first decision on the meaning and effect of consideration and compensation under the provisions of the Code.
  • The case provides some much needed clarification upon the new approach to the valuation criteria and assumptions. The market has been awaiting such clarification which further supports the underlying objective of the new Code.
  • It is worth noting that annual consideration of £21,000 per annum had been agreed upon between the parties prior to the enactment of the new Code.
  • The case marks a significant moment in confirming that landowners can expect a significant reduction in the level of consideration now payable by an operator under the Code.

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