New Code Valuation Regime
Landlords agents are reporting that compulsory purchase order (CPO) values contained in Part 14, Paragraph 84 of Schedule 3A of the "New Code" are mistakenly being applied to determine consideration (rental values) whilst the relevant section that actually deals with consideration- paragraph 24, is being ignored.
The valuation model in Para 24 requires that the Occupier is a willing party to the agreement. When a court determines the consideration payable under paragraph 20, this must be an amount representing the market value of the relevant persons agreement to confer or be bound by the code right (as the case may be).
This is the amount that, at the date the market value is assessed, a willing buyer would pay a willing seller for the agreement, in a transaction at arm's length and on the basis that the buyer and seller were acting prudently and with full knowledge of the transaction. This should include any rights granted in the Agreement.
Sub clause 3(a) excludes:- the value of sharing, upgrading and subletting apparatus; being able to assign rights; value being attributed to the use of the apparatus as a radio base station and it always being assumed that there is a competing alternative available site.
If totally unrealistic rents of say ￡500.00 are offered for a rooftop site for commercial offices in central London (existing rents for subsisting agreements are IRO ￡25k), then the operator should not expect to agree terms.
If a sensible position is not set out in the first instance and operators take to resorting to the courts to impose agreements, then why should the Occupier waste his time in even attempting to respond at all to even the initial contact from the agent or operator. After all the New Code does not grant the operators any rights of access until and unless a Code agreement is in place.
The Government made it clear that it expects operators to use all reasonable means to reach an agreement before resorting to the courts. In other words they still have to be seen to be trying to negotiate and to try to reach agreement in order for the Occupier to become a willing party to the agreement.
If the operator offers a ridiculously low rent, then it could be argued that there has been no real attempt to negotiate- the operator is trying to force an agreement and flawed valuation on an unwilling buyer- a hostile landlord who will not want to cooperate when it comes to granting access for emergency works.
Hopefully operators will realise that it is in everyone's interest to offer sensible rents that will support a new market valuation regime.
MRICS - Director - Amsy Chartered Surveyors
7 年The valuation provisions in Para 24 are for a Court Imposed Agreement. What seems to be ignored in the article and by most of the Operators’ agents (although I suspect by design) is that if the Operators want to negotiate Terms for a lease, whilst what they are calling a “Code Valuation” will only be relevant if and when the matter goes to Court. Not only that, the Valuation will apply to an Agreement the Court can grant under the Code. If the Operator wants an Agreement in the form of a lease to include matters over and above the Code rights, the Operator will have to pay for these additional rights akin to the rents traditionally agreed. I would go further and argue that the value of such leases are now higher than pre new Code as there are rights that cannot be restricted in the Agreement.
Director at DCLW
7 年What is disappointing is the absence of any mechanism to resolve disputes. The Courts are expensive and overloaded. Is it possible for an arbitration mechanism by the relevant industry bodies to be agreed so that disagreements can be resolved?
NTQ Implementation Manager
7 年I have some points on the article, the author asserts that the rent should be a Market rent, but this is still on a 'no scheme' basis once the exclusions are accounted for, "The market value must be assessed on these assumptions— (a)that the right that the transaction relates to does not relate to the provision or use of an electronic communications network;". The Code 'consideration' only relates to code apparatus, however extra rights for non code apparatus such as access tracks and compounds/ fences can also be charged, so a two tier approach could be taken with a Code 'consideration' and a rent/ consideration for rights above those provided for in athe letter of the law. Landowners must always respond reasonably to the Operators approaches, as "he who comes to Equity must do so with clean hands." If the landowner proposes a reasonable rent and the operator declines this and pursues the matter through the courts the Landowner will be in a much more favorable position than if they had failed to engage at all. Operators need to assess the feasibility of new sites and to do this they need to gain access for MSV's, panoramic surveys etc etc. Should a landlord really, and I mean genuinely object rather than commercially seeking a better deal, then they should simply not allow the preliminary investigations in the first place, as no court would allow the operator to benefit from a trespass. That does not seem to be the flavour of this article though, which is more geared to commercial considerations. As with so many things in life it does depend on the 'first impressions' made to the Landowner in question...
NTQ Implementation Manager
7 年I've had operator agents who've asked for advice as their own clients haven't provided any. The legislation is pants and full of holes and contradictions, but in the absence of any clear strategy it's every agent's responsibility to read it for themselves. There is plenty of legal advice and CPD out there for those who are actually interested. I think it's a case of the fees not being enough for tenant agents to be bothered pursuing the extra knowledge if I'm being cynical.
Owner & Head of Telecoms Property Consultancy at Fisher German LLP
7 年Well said John. The operators as we all know are going to try their luck and it amazes me that their own agents seem to have little clue as to what the legislation says or indeed how to value these interests. Interesting times ahead!