The Upper Tribunal's decision in EE and H3G v London Borough of Wandsworth has attracted attention across the telecoms sector.

While the case was decided on other grounds, the Upper Tribunal's comments suggest that some operators occupying under older Landlord and Tenant Act 1954 protected arrangements may be able to seek new agreements under the Electronic Communications Code (the ‘Code’), potentially resulting in lower site rents.

What was the dispute in EE and H3G v Wandsworth?

The dispute concerned telecoms operators EE and Three's continued occupation of a rooftop site at Castlemaine House in Battersea after the expiry of their original lease. The key issue was whether the operators could use Part 4 of the Code to seek a new Code agreement after being in occupation under a lease that had been excluded from the Landlord and Tenant Act 1954 and expired pre-Code.

What did the Upper Tribunal decide?

The Upper Tribunal determined that the operators were occupying as tenants at will, allowing them to pursue a new agreement under Part 4 of the Code.

Both parties also asked the judge to express a view on an issue that, whilst no longer relevant to the case, has long divided practitioners: whether a telecoms operator occupying under an unwritten periodic tenancy entered into before the Code came into force which is protected by the Landlord and Tenant Act 1954 can also use Part 4 of the Code to obtain a new agreement. The significance of the question is that without access to Part 4 of the Code, a periodic tenant cannot activate a renewal of their tenancy under section 26 of the 1954 Act, and therefore cannot benefit from a new lower rent based on the ‘no network’ valuation assumptions.

Why does the decision matter for telecoms rents?

Although it was not necessary to decide the issue, the Upper Tribunal indicated that operators occupying under an unwritten periodic tenancy protected by the Landlord and Tenant Act 1954 and entered into before the Code came into force can still seek a new agreement under Part 4 of the Code.

Setting aside the novel concept of a tenancy being governed by two different statutory regimes, the significance of that view is that that it will allow operators to access Code rents for the last class of tenancies excluded from the ’no network‘ valuation assumptions, which often result in lower rents than traditional market-based lease renewals.

How does this differ from Equipoint?

The Upper Tribunal’s comments are seen as a significant shift from previous authority laid out in the Equipoint case, which suggested that operators occupying under Landlord and Tenant Act 1954 protected arrangements could not use Part 4 of the Code to obtain a new agreement.

While not binding, the Upper Tribunal's comments in EE and H3G v Wandsworth could have significant implications for the way older telecoms sites are renewed and valued.

Key Takeaways

  • The Upper Tribunal found EE and H3G were occupying as tenants at will.
  • The operators were entitled to pursue a new agreement under Part 4 of the Code.
  • The Upper Tribunal indicated that some 1954 Act-protected periodic tenants may also be able to access Part 4 of the Code.
  • Expect operators to be testing this judgment with a move to renew 1954 Act pre-Code periodic tenancies under part 4 of the Code.