Lands Tribunal provides clarity on Scottish telecoms lease renewals

The case relates to applications to terminate existing agreements for six greenfield sites operated by EE Limited and Hutchison 3G UK Limited and order new agreements under the Code.

The case involves six separate applications. In two cases, APW had acquired outright ownership of the site and acted as landlord to EE/H3G. In the other four applications, APW had acquired an interposed tenant’s interest in a long lease of the site from the landowner, effectively making it act as mid-landlord to EE/H3G in the interposed lease.

Although there was no dispute amongst the parties over the six existing agreements being terminated, nor that new terms needed to be fixed, they fundamentally disagreed on the specific terms that should be contained within the new agreements.

The primary issue related to the proposed reduction in rent payment from the amount currently paid. There were also concerns raised around proposals to alter the interim rents and the break rights for the landlord to redevelop the site. APW also proposed a ‘lift and shift’ provision restricted to only cables to allow the landlord to carry out works situated beyond the site that might interfere with the cables.

In July 2024, the Upper Tribunal in England & Wales determined in the Vache Farm decision that the starting point for the annual rent under the code for sites of this nature should be re-evaluated as £1,750.

In the most recent dispute, APW's valuation methodology attempted to rely on higher rents agreed between Code operators, such as where the agreements had been incentivised or for settlements where there was litigation risk. However, the Lands Tribunal rejected this assertion. It reset the new annual rent for greenfield sites at £1,850 but reiterated the Upper Tribunal’s position and ruled that £1,750 was the correct starting point for Code valuation.

Commenting on the decision, Steven Blane, an Electronic Communications Code expert at Pinsent Masons, said: “As the Lands Tribunal for Scotland recognises, the Electronic Communications Code has generated a lot of litigation. This is an important decision providing the clearest guidance to date on how the Tribunal will approach valuation under the Code.”

The Lands Tribunal also set the landlords’ redevelopment break right from year 5, and not year 3 of the agreement, as was sought by APW. It said it would be standard practice that a landlord may need to redevelop the site but reiterated that there was no evidence to suggest that a shorter period would be reasonably required in the circumstances, particularly given how disruptive such a break could be to any operator. 

The Lands Tribunal ruled that the evidence provided by APW’s expert was inadmissible due to its over-reliance on client-provided data, and failure to test presumptions with the other party to the settlement agreement. In particular, it highlighted the importance of ensuring that experts demonstrate genuine independence. 

Blane said the ruling would be critical for providing certainty for telecoms stakeholders, particularly those involved in agreements coming up for renewal. “By reaffirming the primacy of the Vache Farm benchmark and expressly rejecting attempts to rely on real‑world telecoms settlements or incentive‑driven payments, the tribunal has delivered much‑needed certainty for operators and site providers alike,” he said. “Its confirmation that Code valuations must remain anchored to the statutory ‘no‑network’ assumption brings welcome predictability and should significantly reduce the scope for costly valuation disputes in future renewals.”

Blane also said the ruling would bring much-needed stability for telecoms sites in Scotland.  “This is an important step forward in stabilising the Code landscape and will hopefully give all market participants a firmer foundation on which to negotiate agreements for new and existing sites,” he said.

The Lands Tribunal set the interim rent for each site at £1,750 and ordered this to be backdated to the date of the applications, ensuring that the rents remain in the lower bracket.

Becky Neilson, a risk advisory expert at Pinsent Masons, said the tribunal also notably acknowledged that APW's lack of engagement with the notices or proposed Code agreement “until raising issues at the last possible moment” was “a conscious choice". She said the interim consideration was telling in this regard: "The tribunal, in awarding the interim consideration, made clear that delay tactics by site providers will not be rewarded and operators are entitled to the Code valuations from the moment they initiate the Code renewal process.”