If you live or work in London then you are likely to be more than six foot from a piece of telecoms equipment. We are used to looking out of windows over a sea of telecoms aerials. Historically, freeholders were eager to grant leases to telecoms operators to obtain an extra source of income from an otherwise unused space on the roof of their buildings. However, with the introduction of the new Electronic Communications Code in 2017, leases to telecoms providers have fallen out of favour.
The newcomers vying for leases of roof space in city centres are Veriports, which are landing ports for drones. These are likely to become increasingly necessary as commercial drones take to the skies. In April 2015, Amazon’s advert delivering Jamie Clarkson’s new trainers by drone put out as an April Fool. However, it is now a reality.
The property sector is going to have to adapt to deliver the infrastructure required. And perhaps, in the next few years, Veriports will become as prolific as telecoms apparatus. The 2017 Electronic Communications Code was driven by a government desire to make high quality electronic communication services available to all of the public. It has put telecoms providers in a very powerful position. They can now apply to the Court to require landowners to grant them rights to install equipment. Landowners can find themselves fairly powerless to stop these applications. If they do not have plans to develop, they can be adequately compensated by money and the public benefit from the telecoms equipment then that public benefit will be considered to outweigh any prejudice that they may suffer.
Once the equipment is installed, there is a limited ability to terminate the telecom provider’s rights. It is possible to serve notice if there is an intention to redevelop but the notice periods are significant. More frustratingly, the income that landowners can expect to receive from telecoms masts has dramatically decreased. It now equates to the market value of being bound by the telecoms lease. When considering the level of rent, it is assessed on the basis the rights do not relate to the provision of electronic communications network and that the telecoms provider will have alternative sites that it can use. There is also case law that suggests the fact that other telecoms providers might want use of the site for their networks can also not be taken into account. In the absence of any other competition, this has meant the income from leasing roof space to telecoms providers has become increasingly low.
The increase of Veriports may be useful to landowners in a number of ways. Their presence on rooftops may mean that physically there is no space for telecoms providers to install equipment. It may be that they are also willing to pay more for rooftop space which could, in turn, drive up the rents achievable in relation to telecoms equipment as well.
Veriports are still very new to the market, which means that legislation has not caught up with them and there is no specific legislation relating to Veriports at present. No doubt it will be introduced in due course. Early indications are that the Government wishes to stay at the forefront of the drones’ market, so there is always the risk that new legislation in this area may be even less favourable than the Electronic Communications Code.
If a landowner wishes to grant a lease of part of the rooftop to a Veriport provider then there are a number of considerations that they may want to take into account.
Landowners will need to ensure that Veriport providers obtain necessary planning consents. As you might expect, a Veriport is outside the existing use class system and so a sui generis consent may be required for the use.
The purpose of the Veriport will also be important. A landowner needs to consider if it will be part of a network of Veriports? It is expected that the first use of drones is likely to be in the medical profession. Therefore, buildings near hospitals or blood banks may be more attractive. Alternatively, this may be a service for tenants of the building. Many business improvement districts are looking for more environmentally friendly options to tackle the number of Amazon style deliveries that occupants receive each day. This may be attractive to them.
Access may be an issue. Telecoms equipment only requires occasional access. However, Veriports will require regular access as somebody will be responsible for collecting the parcels from the rooftop. This may be occupiers of the building or, if it is part of a commercial venture, third parties may require access. It needs to be considered whether this access can be provided without infringing on the current tenants’ rights. There are also health and safety concerns regarding whether it is safe to allow people onto the roof to collect the parcels.
Buildings insurance will also need to be updated. In particular, occupiers and third party liability cover will need to be extended to the roof. This is likely to be a new area for insurers and so bespoke policies may be required.
Due diligence should be undertaken in respect of the Veriport providers, landowners should ensure that the drones are operated in accordance with all applicable laws and guidance of the Civil Aviation Authority and that the necessary permits, permissions and licences have been obtained. The Gatwick Airport problems highlight that the Civil Aviation Authority rules prevent drones flying within a specified distance of airports. Therefore, this may rule out some properties in their vicinity.
The purpose of the drones should also be considered in relation to the tenants of the building. If the Veriports are in use in a certain way then it may cause nuisance to the tenants. Landowners may wish to consider future proofing their new leases by including a reservation that enables them to use the roof as a Veriport notwithstanding the disturbance and nuisance that this might cause the tenants.
Finally, if a lease is granted to a Veriport owner then it is vital that they contract out of the Landlord & Tenant Act 1954 to ensure they do not acquire security of tenure. This will mean that it will be relatively easy for landowners to remove Veriport providers from the roof at the end of their leases and facilitate redevelopment, where necessary.
There is no question that the letting of rooftop space to Veriport providers is a new and exciting emerging market. It is certainly going to be interesting to see what happens now that the telecoms operators no longer have a monopoly over the spaces.