195: Granting wayleave agreements to telecommunications companies: hidden traps for landlords

Sarah Godfrey Of Counsel

Most businesses use fixed line or wireless telecommunications equipment (such as BT lines) as part of their business, which necessitates installing equipment and cabling at their property and potentially also through a landlord’s adjoining property. To do so the telecommunications operator (eg BT) will require a wayleave agreement (documenting their right to install and retain their equipment) to be entered into.

In an owner occupied building the wayleave will be a bilateral agreement between the business and the operator and is therefore relatively straightforward. Where the business is a tenant, the situation is more complex as it is the landlord that will need to grant the rights over their building.

For a landlord, it is usually expedient to enter into a wayleave (after all what tenant would want to occupy a premises from which they couldn’t run their business?), however they should be aware of the implications of entering into an electronic communications wayleave agreement. These include the following:

Operators have the right to remain in situ even after the contractual agreement has been terminated – When a party enters into an electronic communications wayleave agreement, they need to be aware that they will be subject not only to the express terms included in the wayleave agreement, but also to the terms imposed by the Electronic Communications Code 2017 (the Code) (which came into force on 28 December 2017).

Even if the contractual wayleave agreement is terminated, if the operator does not remove their equipment, the landowner would need to serve 18 months’ notice on the operator in the form prescribed by the Code in order to bring the statutory wayleave agreement to an end. This is because the Code grants security of tenure to telecommunications operators.

The landowner can only serve this notice in limited circumstances, such as if they have a settled intention to redevelop the premises (and if the development could not reasonably be carried out unless the agreement ends) or if the operator has substantially breached its obligations in the agreement. Even then if the operator contests the notice the process may require a court hearing, so the outcome is not certain. A further formal application may also be needed to require the operator to remove their equipment.

All this could be time-consuming and costly for a landlord who wishes to redevelop their property. For a tenant, they may find that they are unable to comply with their reinstatement obligations at the end of a lease term.

First draft wayleave agreements are rarely balanced documents – Standard form wayleave agreements issued by telecommunications companies usually grant the operator extensive rights (often over a landowner’s entire building) and include few protections for a landowner. Furthermore, wayleave agreements rarely include the tenant as a party, meaning that the landlord misses out on receiving the benefit of covenants from the very party that requested the wayleave agreement in the first place.

Implied terms in wayleave agreements – Under the Code, notwithstanding the contractual terms of the wayleave agreement, the operator can upgrade and also share equipment with other operators and can assign the wayleave agreement to another party without obtaining landowner consent. First draft wayleaves are often silent on these points and therefore miss out key supplementary provisions that a landlord should insist on.

What can a landlord do to mitigate the implications of entering into a wayleave?

Whilst it is not possible to contract out of the Code, it is possible to negotiate a fairer form of wayleave agreement that includes additional protections for the landlord. A well-advised landlord should therefore seek input from a solicitor experienced in negotiating electronic communications wayleave agreements. Furthermore, it should be possible to require that the tenant pays for the landlord’s legal fees in negotiating the agreement.

If you require advice about an electronic communications wayleave agreement, please contact our commercial real estate team.