Why Commercial Property Investors Should Understand Telecoms Leases and the Electronic Communications Code Before Buying

A small telecoms installation can create a much bigger property issue than its rent suggests

Commercial property investors often welcome additional income.

A mobile phone mast, rooftop antenna, communications cabinet or other telecoms installation may generate rent from an area of a property that would otherwise produce little income.

On the surface, it can look like an easy investment benefit.

But telecommunications equipment is not necessarily comparable to an ordinary commercial tenancy.

Certain telecoms operators can benefit from statutory rights under the Electronic Communications Code, and those rights can become highly relevant when an investor wants to redevelop, alter, refinance or sell the property.

For commercial property investors across Bury, North Manchester and the wider North West, telecoms equipment should therefore never be treated as an insignificant item simply because it occupies a small physical area.

What telecoms equipment might you find on commercial property?

Telecommunications infrastructure can take many forms.

Depending on the property, an investor might encounter:

• Rooftop antennas
• Mobile phone masts
• Communications cabinets
• Fibre equipment
• Cable routes
• Equipment rooms
• Ground-based compounds
• Supporting structures

Some installations are immediately obvious.

Others are much less noticeable.

Why do telecom operators use commercial buildings?

Telecommunications networks require infrastructure across large geographic areas.

Commercial properties can offer useful locations because they may provide:

• Height
• Rooftop space
• Power
• Secure access
• Strategic positioning

A tall office building or industrial structure may therefore be attractive for communications equipment.

What is the Electronic Communications Code?

The Electronic Communications Code is the legal framework governing certain rights relating to electronic communications networks and infrastructure.

It can give qualifying operators important statutory rights concerning the installation and maintenance of communications apparatus.

The Code is contained within the Communications Act 2003, as amended.

Because the legal framework is specialist and can change, investors should obtain appropriate legal advice rather than relying on a general understanding of ordinary landlord and tenant law.

Why does this matter to a commercial property investor?

Because a telecoms agreement may affect more than the rent being received.

An investor may need to understand:

• The operator’s rights
• Access arrangements
• Equipment location
• Renewal
• Termination
• Removal

These matters can become particularly important where the purchaser intends to change the property.

Don’t treat telecoms agreements like ordinary leases

A common mistake is assuming that because an agreement has an expiry date, the operator will simply leave on that date.

The legal position can be considerably more complicated where Code rights apply.

Investors should therefore avoid basing redevelopment programmes solely on the contractual expiry date shown on a telecoms agreement.

Redevelopment is where telecoms rights can become particularly important

Imagine purchasing an older commercial building because the site has excellent redevelopment potential.

The plan is:

1. Acquire the property.
2. Obtain planning permission.
3. Demolish the existing building.
4. Construct a new development.

There is a telecoms installation on the roof.

If the investor assumes it can simply be removed when required, the development programme could be based on a serious misunderstanding.

Telecoms rights should be investigated before completion.

Small rental income can create disproportionate strategic consequences

Suppose a telecoms operator pays £5,000 per annum.

The investor may initially view this as useful additional income.

But if the installation interferes with a redevelopment capable of creating substantially greater value, the strategic importance of the telecoms arrangement may far exceed £5,000.

Investors should therefore analyse telecoms agreements according to their impact on the whole asset.

Check whether the operator has Code rights

Not every piece of communications equipment creates exactly the same legal position.

The buyer’s solicitor should establish:

• Who the operator is
• What agreement exists
• What statutory rights may apply

This is specialist legal due diligence.

Ofcom maintains information relating to Code operators

Ofcom is the UK’s communications regulator and publishes information concerning the Electronic Communications Code and operators.

This can provide useful background, although investors should still obtain transaction-specific legal advice.

Access rights deserve careful attention

Telecoms equipment needs maintenance.

The operator may therefore require rights to reach its apparatus.

Those rights could potentially involve:

• Roof access
• Internal corridors
• Service yards
• Plant rooms
• Access roads

Investors should understand exactly where those routes run.

24-hour access can affect management

Some telecommunications infrastructure may require emergency access.

That can create practical estate-management questions.

For example:

• Who provides keys?
• How is access controlled?
• Can engineers enter outside normal hours?
• What happens if the property is occupied by another tenant?

These issues should be understood rather than discovered during an emergency callout.

Rooftop equipment can interfere with future works

Commercial landlords increasingly want to use roof areas for other purposes.

Projects might include:

• Roof replacement
• Solar panels
• New plant
• Extensions

Existing telecommunications apparatus could affect how those projects are delivered.

Solar and telecoms can compete for roof space

Warehouse roofs are increasingly viewed as potential energy-generating assets.

A landlord may want to install a substantial solar PV system.

If parts of the roof already contain telecoms equipment and associated exclusion or access areas, the available layout may be reduced.

This does not necessarily prevent solar development.

But it should be considered at design stage.

Roof replacement can become more complicated

Imagine an industrial property with an ageing roof.

The investor intends to replace it immediately after acquisition.

Telecoms apparatus is mounted on or around the roof.

The contractor may need the equipment temporarily:

• Protected
• Relocated
• Coordinated around

This can affect both cost and programme.

Structural loading should be understood

Telecommunications equipment can impose loads on the building.

Where substantial installations exist, investors may want to understand whether appropriate structural documentation is available.

This becomes particularly relevant when:

• Adding new equipment
• Replacing the roof
• Altering the structure

A structural engineer may need to review the position.

Power supply can be part of the arrangement

Telecoms apparatus generally requires electricity.

Investors should understand:

• How power is supplied
• How consumption is measured
• Who pays

Poorly documented utility arrangements can create unnecessary management disputes.

Service-charge arrangements may also matter

Where telecommunications equipment is located within a multi-let commercial building, the operator may benefit from common facilities or landlord services.

Investors should establish whether the agreement properly addresses relevant costs.

Insurance should be checked

Commercial property insurers should have accurate information about material installations and uses affecting the building.

Investors should ensure that telecoms apparatus is appropriately reflected within insurance arrangements where necessary.

Equipment ownership should be clear

A telecommunications installation may contain valuable equipment.

But it should not automatically be assumed to belong to the landlord simply because it is attached to the building.

The agreement should establish the position.

Cabling can extend far beyond the visible equipment

An antenna on the roof may be only the most visible part of the installation.

Associated infrastructure can include:

• Cables
• Ducts
• Cabinets
• Power equipment

These may pass through other parts of the property.

Investors planning alterations need to understand the entire installation.

Don’t cut unidentified telecoms cables during refurbishment

This sounds obvious, but older commercial buildings can contain extensive redundant-looking cabling.

Contractors should establish what is active before removing infrastructure.

Disconnecting operational telecommunications equipment can create serious problems.

Equipment relocation should be investigated early

An investor may be happy for telecoms equipment to remain but want it moved from one section of the property to another.

Do not assume relocation is straightforward.

Questions can involve:

• Legal rights
• Technical requirements
• Network coverage
• Cost

Early discussions are therefore important.

Removal can require a formal legal process

Where Code rights apply, obtaining removal of telecommunications apparatus can involve specific legal procedures.

Investors should not assume they can simply serve an ordinary notice and demand immediate removal.

Specialist solicitors should advise on the correct process.

Timing can be crucial for developers

A development may have:

• Planning deadlines
• Funding deadlines
• Contractor programmes

If telecoms removal is left until the final stage, delays can become extremely expensive.

Developers should therefore investigate telecoms rights at the earliest possible point.

Purchase contracts should reflect known issues

Where a telecoms installation creates a material development issue, the buyer’s solicitor may consider how this should be addressed within the transaction documentation.

The appropriate approach will depend on the circumstances.

The important point is that the issue is identified before completion.

Existing notices should be reviewed

The seller may already have received correspondence from an operator concerning:

• Renewal
• New equipment
• Access
• Upgrades

Investors should request relevant documentation.

A purchaser needs to know not only what agreement exists today but also what negotiations may already be underway.

Operator upgrades can affect the property

Telecommunications technology changes.

Operators may seek to:

• Upgrade apparatus
• Replace equipment
• Add equipment

The extent of any rights to do so will depend on the applicable legal framework and agreement.

Landlords should understand what control they retain.

Sharing equipment can matter

Telecoms networks can involve infrastructure being shared or used by more than one operator in certain circumstances.

Investors should not assume that the company named on the original agreement is necessarily the only party that could ever use the installation.

Again, specialist advice is important.

Telecoms income should be analysed separately

Where a property generates telecoms rent, investors should distinguish this from the main occupational income.

Consider:

• Annual rent
• Agreement term
• Review provisions
• Operator rights
• Strategic impact

A small secondary income stream should not automatically be capitalised in exactly the same way as the main property rent.

Don’t overvalue rooftop income

Additional income is attractive.

But investors should remain commercially disciplined.

The question isn’t simply:

“How much rent does the mast produce?”

It is also:

“What restrictions come with that income?”

Sometimes flexibility may be more valuable than the additional rent.

Telecoms can also be genuinely beneficial

The risks should not obscure the advantages.

A well-documented telecoms arrangement can provide:

• Additional income
• Productive use of otherwise unused space
• Long-term occupation

For an investor with no redevelopment plans, the arrangement may be entirely compatible with the investment strategy.

Long-term ownership can suit telecoms income

Suppose an investor owns a mature office investment intended to be held for twenty years.

There is no realistic redevelopment plan.

A rooftop telecoms installation may therefore represent useful supplementary income without materially conflicting with the asset strategy.

Context matters.

Development sites require a different mindset

Now consider an investor buying the same building specifically because the site could accommodate a larger development.

The telecoms installation becomes much more significant.

The same agreement can therefore have completely different implications for different investors.

Understand your exit strategy

A future buyer will investigate the telecoms arrangement too.

If the likely purchaser is:

• A long-term income investor

the equipment may be viewed positively.

If the likely purchaser is:

• A developer

the rights may receive far more scrutiny.

Your eventual exit market should therefore form part of today’s decision.

Lenders may want clarity

Commercial lenders generally want to understand material rights affecting their security.

Where telecoms equipment has significant implications for redevelopment or property management, clear documentation can help avoid uncertainty during finance due diligence.

Valuers need accurate information

A valuer assessing a commercial investment should be provided with the relevant telecoms agreement where it produces income or materially affects the property.

Hiding complexity does not make it disappear.

Professional advisers can only assess the investment properly when they have the complete information.

Telecoms agreements can survive ownership changes

Buying the property does not necessarily mean existing occupational rights simply disappear.

Investors need to understand what obligations and rights they are acquiring alongside the building.

This principle applies broadly across commercial property but can be particularly important with telecommunications infrastructure.

Multi-let buildings need careful access management

Telecoms engineers may need to pass through tenant-controlled areas to reach equipment.

That can create practical issues.

Good building design should ideally provide service access without unnecessarily disrupting occupiers.

Future leases should protect access routes

Where a landlord grants a new lease of accommodation around existing telecoms infrastructure, the lease documentation should preserve whatever access the landlord needs to comply with existing obligations.

Poor lease planning can create conflicting rights.

Rooftop safety matters

Telecommunications engineers working at roof level require appropriate safe access.

Depending on the building, this might involve:

• Roof access systems
• Guarding
• Walkways

Health and safety should therefore form part of the property-management strategy.

The Health and Safety Executive provides official guidance relating to working at height and workplace safety.

Empty buildings can still require telecoms access

An investor may purchase a vacant office building and assume it can simply secure the entire site.

But an operator with existing rights may still require access to its equipment.

This should be incorporated into vacant-property security arrangements.

Security procedures should recognise authorised engineers

On secure industrial estates, guards or access-control systems need to know how legitimate telecoms engineers are handled.

Without a clear procedure, either:

• Unauthorised access could occur

or

• Legitimate access could be incorrectly prevented.

Both situations can create problems.

Telecoms equipment can affect demolition planning

Before demolishing a building, developers should identify:

• Active apparatus
• Cabling
• Associated rights

Telecommunications infrastructure should be dealt with through the correct legal and technical process before demolition begins.

Don’t assume the planning permission solves the telecoms problem

Obtaining planning permission to redevelop a property does not automatically remove private or statutory rights affecting the land.

Planning and property rights are separate considerations.

This distinction is extremely important for development investors.

Build telecoms timing into the development appraisal

If removal or relocation may take time, the development model should allow for that.

Potential consequences of delay can include:

• Finance costs
• Contractor delay
• Lost development income

Ignoring the programme risk can produce an unrealistically optimistic appraisal.

Specialist legal advice can be worthwhile

The Electronic Communications Code is a specialist area of property law.

Where significant telecoms infrastructure exists, investors should consider instructing solicitors with relevant experience.

The Law Society of England and Wales provides resources for finding legal professionals.

Surveyors can also play an important role

Telecoms arrangements can involve:

• Rental valuation
• Site inspection
• Property strategy

Appropriately experienced chartered surveyors may therefore form part of the professional team.

Information about qualified property professionals is available from the Royal Institution of Chartered Surveyors (RICS).

Due diligence should identify every installation

When viewing a commercial property, investors should physically look for:

• Roof antennas
• Masts
• Cabinets
• Compounds
• Unusual cabling

If something appears to be telecoms infrastructure, ask about it.

Do not assume it is redundant.

Ask the seller for the full documentation

Useful information may include:

• Original agreement
• Variations
• Rent-review documents
• Operator correspondence
• Plans
• Access arrangements

Incomplete documentation should trigger further enquiries.

What should investors ask before buying?

Where telecommunications equipment is present, useful questions include:

• Who is the operator?
• What equipment is installed?
• What rent is being paid?
• What rights does the operator have?
• When does the agreement expire?
• What access rights exist?
• Are there rights to upgrade or share?
• Who pays electricity?
• Does the equipment affect roof works?
• Could it interfere with redevelopment?
• What is the process for relocation or removal?

The significance of each question will depend on the investment strategy.

Don’t ignore apparently redundant equipment

A building may contain an old-looking antenna or cabinet.

Before treating it as abandoned, establish its status.

Infrastructure can remain operational even when it appears dated.

Keep records throughout ownership

If the operator carries out works during your ownership, maintain proper records.

This could include:

• Correspondence
• Drawings
• Consents
• Access arrangements

Good records will make future management and eventual sale considerably easier.

Telecommunications infrastructure is becoming more important, not less

Businesses increasingly depend on:

• Mobile connectivity
• Cloud software
• Connected equipment
• Remote working
• Data

The physical networks supporting those services therefore remain important parts of national infrastructure.

Commercial property owners will continue to interact with telecommunications operators.

Understanding the legal framework is therefore increasingly relevant to professional asset management.

North Manchester investors should consider both income and flexibility

Across Bury, Manchester and the wider North West, telecoms equipment can appear on a wide variety of commercial buildings.

For some investors, it can provide useful additional income.

For others, particularly developers, it may influence future plans.

Neither conclusion is automatically right or wrong.

The important thing is understanding the arrangement before buying.

Citrus Commercial Circle’s market insight

At Citrus Commercial Circle, we believe small areas of a commercial property should never be dismissed simply because they generate relatively little rent.

A telecommunications installation may occupy only a tiny percentage of the building.

But if that equipment sits exactly where an investor wants to:

• Extend
• Replace the roof
• Install solar
• Redevelop

its strategic significance can become much greater than its physical size.

The key question is therefore not simply:

“How much rent does it produce?”

It is:

“How does this agreement fit with my long-term plan for the property?”

Final thoughts

Telecommunications equipment can be a useful source of additional commercial property income.

But agreements involving qualifying telecoms operators can sit within a specialist statutory framework, and investors should understand the relevant rights before purchasing.

This becomes particularly important where the strategy involves redevelopment, demolition, roof replacement or major alteration.

Early legal and property due diligence can help investors understand whether a telecoms installation is:

• A useful income stream
• A manageable property-management issue
• A potential development constraint

At Citrus Commercial Circle, we help landlords and investors across Bury and North Manchester consider the practical details that can influence commercial property value, management and future development potential.

Based in Bury. Active across North Manchester. Always on your side.

Call us today: 0161 383 1806

Email: info@citruscommercialcircle.co.uk

Visit: citruscommercialcircle.co.uk

Let’s unlock the full potential together.

Citrus Commercial Circle – Where standards meet success.