News

Negotiating Communications Site Leases

Many landowners and farmers will all too often have first-hand experience of the poor broadband and phone network connectivity experienced in rural areas.

Thankfully, we are now seeing efforts from government to improve connectivity across rural Scotland. I see this as having the potential to affect landowners and farmers in 2 aspects - improved connectivity in the longer term, and in the short term, the drive for better coverage means that there is likely to be continued demand for new sites to host communications infrastructure.

A new Electronic Communications Code, which will provide a framework for how telecoms operators can acquire sites to install and maintain copper telephone wires, fibre optic cables and telecoms masts, looks set to come into force by the end of 2017.

The new code is worth flagging up now. Firstly, because there is a possibility of increased activity from telecoms operators wishing to tie up deals on new and existing sites prior to the introduction of the code, and secondly because when the code does come into force it is likely to take a while to bed in and, importantly, to influence the market value of site rents.

Under the new Code, market value will be a key consideration when setting a site rent.  For a while it was thought that the ‘consideration’ may be based on compensation, eg loss of alternative earning potential from land. I have no doubt that site rents would have decreased significantly if the compensation model had been chosen, so news that rents are to be based on market value has been welcomed by site owners and their agents.

Expert advice, from a land agent experienced in the communications sector, should always be sought when engaging with communications providers. This will be especially important in the period when the new Code is first bedding in and – with precious few comparables – market value is likely to be difficult to calculate.  Network operators could pressurise non-represented landowners into a deal which is not reflective of the market, impacting on rents going forward.

Under the Code, sites will only ever be acquired by agreement – the code does not grant compulsory purchase powers to communications operators. However, the Code does stipulate that, if an agreement cannot be reached, operators will be able to ask the courts to impose an agreement, imposing “fair and reasonable” terms where the operator’s access to the site is in the public interest.

The ‘public interest’, with regards to sites for communications infrastructure, could see the net being cast wide in the search for new sites. Not only is new infrastructure likely to be the only cure for low connectivity in remote areas, but also sites, across Britain, are actively being sought at present for a new comms network for the emergency services.

A last point to raise with new agreements, is that the Code will grant operators freedoms to assign the agreement to a third party, e.g. to another operator, and freedoms to upgrade and share the apparatus where doing so does not have more than minimal visual impact or impose added burdens on the landowner.

To sum up, after a long period of relative inactivity with regards to new communications infrastructure, it looks like we are about to enter a new period of expansion. With this in mind, the new Electronic Communications Code – itself part of wider Digital Economy legislation – is unlikely to make the sector any less complex to understand and navigate, and I would therefore urge any landowner or farmer to seek expert advice before engaging with a communications provider.

It is helpful, for both parties, if a suitably qualified Land Agent is involved in negotiations at an early stage.  Network operators are almost always willing to meet agents’ fees for lease negotiations, meaning there is no cost to the landowner for expert advice.

 

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Energy Storage - Opportunities for Landowners

Scotland has often been described as the Saudi Arabia of renewables. While some of these low carbon technologies are starting to compete with conventional energy on generation costs, the vast majority still need assistance in the form of subsidies to make the eye watering costs of installation stack up. The recent cuts to the subsidy regimes in the UK have led to a large scale reduction in the number of new schemes coming forward, with developers tending to concentrate on larger offshore schemes where public objections are less and where the subsidy regime is more generous. While there are opportunities for landowners to negotiate good capitalised payments for the imposition of cables run from these offshore installations to connect with the National Grid, it should be noted that in nearly all cases the renewables developer is negotiating with the threat of Compulsory Acquisition in their back pocket and agreements can feel rather one-sided and not the magic money tree some imagine. The use of a good agent is recommended!

An oft under reported side effect of the replacement of conventional power generation with intermittent renewable energy generation is the strain this places on the electricity grid with power generated at times of little demand and vice versa. The UK Government has tried to deal with this by paying windfarms to turn off their turbines at a time of excess generation and also pay conventional generators to run at a reduced capacity, ready to ramp up generation at short notice when demand exceeds supply. Clearly this is a nonsense and not a long term or cost effective solution.

Fortunately, recent improvement in battery technology has provided a solution to the National Grid’s difficulties in balancing the electricity grid and Battery Storage sites are springing up in rural areas with close proximity to 11Kv or 33Kv powerlines or substations. These battery storage sites act as a "sponge", soaking up excess capacity and releasing it at times of peak demand. The sites are very unobtrusive and generally consist of custom built shipping containers densely packed with lithium ion battery systems, effectively "plug and play". So long as they are located adjacent to or in close proximity to powerlines or substations with sufficient excess transmission capacity then the site can be located in the corner of a field or area of unused ground. Hardstanding areas or former quarries with upto an acre or so of level ground and good access are ideal.

The market is relatively undeveloped in Scotland and there are opportunities to negotiate good rents with developers competing for the best sites. Rents are based on the battery capacity of the site (as opposed to the area utilised) and take into account the cost of the grid connection and capacity available in the local electricity grid. Developers will often quote figures based on an "ideal" site and landowners should recognise that transmission and grid connection costs in NE Scotland will reduce rents accordingly. As always, the use of an experienced agent is highly recommended, particularly as their cost should be met by the developer.

Davidson & Robertson has considerable experience of acting on behalf of landowners and, with our national coverage, we are well placed to answer any queries or concerns you might have. We have offices located at: Maud, Forfar, Edinburgh, Bathgate, Lanark, Castle Douglas, Cockermouth and Berwick-upon-Tweed, where our Land Agents, Surveyors and Valuers are focussed on adding value to our clients’ business interests.

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After decades of discussion the A77 Maybole bypass finally gets the go ahead

There has long been a demand for a bypass around the Ayrshire town of Maybole. With a narrow main street and large volumes of traffic passing through from the ferry port at Cairnryan, congestion and delays are a regular occurrence within the town. Transport Scotland describes the aims of the project as being to "remove conflict between local and strategic traffic, relieve congestion in the town, and improve safety and journey time reliability on the A77 trunk road".

Whilst news of the bypass has been welcomed by locals, many local landowners stand to lose productive farmland to make way for the bypass. Due to the nature of the project, land is being purchased under Compulsory Purchase Order (CPO). The CPO process is complex and can be a daunting prospect for landowners. Government offers guidance on the topic but the Scottish Ministers recommend that you seek advice from a professionally qualified person such as a surveyor or solicitor.

In addition to land being acquired by CPO, some landowners face having to adapt their business around the new road which is, in some cases splitting the farm in two. Landowners are left genuinely concerned about practical day to day management along with financial implications.

With offices throughout Scotland and the North of England, Davidson & Robertson (D&R) has a talented team of professionals with a wealth of experience in representing clients in CPO negotiations and already represents clients affected by similar bypass projects at Dalry, in North Ayrshire and on the Aberdeen Western Peripheral route. D&R also represents landowners affected by the new Forth crossing.

D&R has a thorough understanding of clients’ concerns, with experience of the large range of issues, not always immediately apparent, that landowners may face because of major roads projects. Drawing on this wealth of understanding enables us to ensure our clients are fully represented in negotiations and achieve fair and practical settlements.

With a new D&R office about to open at Ayr Market and many existing clients along the route of the Maybole Bypass, we have an excellent reputation that has led to us being engaged by the majority of landowners to look after their interests in the Compulsory Purchase scheme at Maybole.

 

Useful Links:

Scottish Ministers recommend that you seek advice from a professionally qualified person such as a surveyor or solicitor:
www.transport.gov.scot/publication/road-projects-guidance-on-the-compulsory-purchase-process-and-compensation/

This project involves the construction of a new off-line bypass of the town of Maybole and associated junctions to connect to the existing A77 trunk road:
www.transport.gov.scot/projects/a77-maybole-bypass/


 

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