Harmonising rent and compensation on electronic communications tenancy renewals
Summary
New regulations[1] have been passed that bring into force on 7 April 2026 (subject to saving and transitional provisions) important sections of the Product Security and Telecommunications Infrastructure Act 2022. Those sections harmonise the rent and compensation payable on an electronic communications tenancy renewal under Part 2 of the Landlord and Tenant Act 1954 (“1954 Act”), with the rent and compensation payable on an electronic communications tenancy renewal under the Electronic Communications Code (“Code”). This will close the current loophole of 1954 Act renewals of electronic communications tenancies having a more flexible (and generous to landlords) valuation regime and will bring them strictly in line with renewals under the Code. There is an important point for landlords to note on the level of rent chargeable for the statutory continuation period following expiry of the tenancy being renewed. The changes affect England, Wales and Northern Ireland, but this Law-Now only covers the position in England and Wales.
Discrepancy between 1954 Act and Code renewals
On 7 April 2026 (subject to important saving and transitional provisions mentioned below at What happens to “Live Tenancies” and the Backdating Issue?), sections 61–64 (“the Renewals Provisions”) of the Product Security and Telecommunications Infrastructure Act 2022 will come into force to tackle an existing discrepancy between 1954 Act and Code electronic communications tenancy renewals in relation to the level of rent and the compensation payable to the landlord. Currently, the position varies depending on whether the tenancy being renewed is:
- a tenancy under the old Telecommunications Code entered into before 28 December 2017 and in force at 28 December 2017 (known as a “subsisting agreement” in the transitional provisions in Schedule 2 to the Digital Economy Act 2017); or
- a tenancy under the new Electronic Communications Code entered into on or after 28 December 2017.
With the renewal of a tenancy under the old Code (at 1 above) that has protection under Part 2 of the 1954 Act, the 1954 Act applies to the renewal tenancy and, currently, the tenant pays a rent at a level in accordance with the 1954 Act (assessed on a “market valuation” basis), and there is no compensation potentially payable to the landlord under the Electronic Communications Code.
With the renewal of a tenancy under the new Code (at 2 above), the 1954 Act does not apply to the renewal tenancy and the tenant pays a lower rent (assessed on a “no network” basis) than it would have paid had it been a 1954 Act renewal. There is compensation potentially payable to the landlord under the Electronic Communications Code.
Rental harmonisation
The Renewals Provisions address this discrepancy by making changes to Part 2 of the 1954 Act in relation to tenancies protected and renewed under the 1954 Act whose primary purpose is to confer Code rights on Code operators[2] relating to electronic communications infrastructure. The changes will alter the financial terms on renewal of the tenancy, by replacing the valuation frameworks contained in the 1954 Act with provisions on rent and compensation that mirror those in the Code. The position is, therefore, harmonised between 1954 Act renewals and Code renewals and the bottom line for landlords is that the rent will be much lower, although they may receive some compensation (see Compensation harmonisation below).
For a renewal under the Code, the rent is assessed on the assumption that the rights to which the tenancy relates do not relate to the provision or use of an electronic communications network. So, even though the Code operator can use the premises for such a network, the rent is not valued on that basis. This was an intentional policy objective of the legislation (Communications Act 2003) to encourage the rollout of electronic communications infrastructure and networks by making it cheaper, rent-wise, to do so.
The Renewals Provisions apply this same “no electronic communications network” valuation approach for the rent (and any interim rent) under a 1954 Act tenancy renewal whose primary purpose is to confer Code rights.[3]
Compensation harmonisation
The Renewals Provisions will also harmonise the position between 1954 Act renewals and Code renewals for the compensation that the court/tribunal may order the tenant to pay to the landlord for any damage or loss that has been sustained or will be sustained by the landlord as a result of the exercise of any of the Code rights conferred by the new tenancy.
Part 2 of the 1954 Act will be changed to allow for such compensation in relation to tenancies protected and renewed under the 1954 Act whose primary purpose is to confer Code rights.
Depending on the circumstances, the compensation can include payment for—
- expenses (including reasonable legal and valuation expenses)
- diminution in the value of the land and
- the costs of reinstatement.
The basis for assessing compensation for diminution in the value of the land is that used to assess compensation for the compulsory purchase of an interest in land under rules (2) to (4) in section 5 of the Land Compensation Act 1961. This value is the amount which the land, if sold in the open market by a willing seller, might be expected to realise, which is to be assessed in the light of the so-called “no-scheme principle”. The no-scheme principle is that any increase in the value of land caused by the scheme for which the authority acquires the land (in this case, the Code), or by the prospect of that scheme, is to be disregarded, and any decrease in the value of land caused by that scheme or the prospect of that scheme is also to be disregarded. The effect of this is that the compensation will not take account of the fact that the land will be let and used for Code purposes, which means that the landlord will receive a much-reduced compensatory sum (if any) - after all, how much would a Code operator pay for land which it cannot use for Code purposes?
What happens to “Live Tenancies” and the Backdating Issue?
While the coming into force date for the changes outlined in this Law-Now is 7 April 2026, there are important saving and transitional provisions to address what the Government calls “Live Tenancies” and the “Backdating Issue”.
The Government is concerned that problems may arise if the changes are applied to “Live Tenancies” - they are tenancies which have reached or passed a date where under the 1954 Act, a section 25 notice or section 26 notice may be served (where a renewal or termination may be sought).
Such problems include uncertainty as to which valuation regime applies; the applicable valuation regime could depend on the date that a case is heard; and evidence issues in respect of tenancies listed for hearing when the Renewals Provisions come into force.
The regulations bringing in the changes, therefore, include a saving provision to ensure that there is a clear transition between the two valuation regimes in relation to Live Tenancies, and to minimise litigation on questions relating to which regime applies to them.
The effect of the saving provision is that the changes (the Renewals Provisions) will not apply to 1954 Act renewals where the date specified in the section 25 notice or section 26 notice falls before 7 April 2026. In that situation, the current 1954 Act regime will continue to apply, with the rent being calculated on the open market rather than the no network basis, and no compensation provision will be available. The Renewals Provisions will apply in all other 1954 Act renewals whose primary purpose is to confer Code rights, including those renewals where a notice is served before 7 April 2026, but the date specified in the notice falls on or after 7 April 2026. The operation of the saving provision is unaffected by an agreement extending time limits under section 29B of the 1954 Act.
The regulations also include a transitional provision to deal with what is called the “Backdating Issue”. This seeks to avoid the risk of landlords having to repay interim rent already received for periods before the Renewals Provisions come into force (when the market valuation model applied), as a result of the change made by the Renewals Provisions to the “no network” model.
The effect of the transitional provision is that the determination of interim rent for periods ending on 6 April 2026 is not affected by the changes made to the valuation framework in the 1954 Act.
For interim rents for subsequent periods, the rent will be based on a “no network” valuation in line with the 1954 Act as amended by the Renewals Provisions. This approach means that in some cases the total amount of interim rent may involve two separate figures (a dual calculation) for before and after the Renewals Provisions come into force.
Where landlords are dealing with a renewal where the interim rent (or part of it) will be based on a “no network” valuation, landlords will need to give careful consideration to the level of the “no network” rent and to invoicing for rent based on the “no network” valuation from 7 April 2026 (in a dual calculation situation) or from the later date from which interim rent is payable (rather than simply continuing to invoice for rent for the statutory continuation period at the amount payable under the tenancy being renewed). An alternative approach for the landlord may be to continue to invoice for rent for the statutory continuation period at the amount payable under the tenancy being renewed, but to ringfence a proportion of the rent received to reflect any refund that may be required. This will reduce the impact of any possible rental refund required following the determination of the interim rent based on a “no network” valuation.
Conclusions
The property and telecoms industries have been waiting for some time for these legislative changes to be implemented. This is explained at least in part by the consultation published by the Government last year on the saving and transitional provisions in relation to the changes. The Government’s response to the consultation can be found here Draft regulations to commence Sections 61 to 64 of the Product Security and Telecommunications Infrastructure Act 2022 - GOV.UK.
The changes will from 7 April 2026 (subject to the saving and transitional provisions) close the current loophole of 1954 Act renewals of electronic communications tenancies having a more flexible (and generous for landlords) valuation regime and will bring them strictly in line with renewals under the Code. There will, therefore, be a harmonisation of the rent and compensation payable to landlords on electronic communications tenancy renewals, whether under Part 2 of the 1954 Act or the Code.
It is important to be alert to the impact of the saving and transitional provisions (see What happens to “Live Tenancies” and the Backdating Issue? above).
The coming into force date of 7 April 2026 is also intended to support alignment with the bringing into effect of section 65 of the Product Security and Telecommunications Infrastructure Act 2022, which will permit disputes affected by these changes to be dealt with by the First-tier Tribunal (Property Chamber) in England and Wales.
[1] The Product Security and Telecommunications Infrastructure Act 2022 (Commencement No. 4, Saving and Transitional Provisions) Regulations 2025 passed on 15 December 2025.
[2] See Register of persons with powers under the Electronic Communications Code.
[3] It is noteworthy that in Vodafone Limited v Hanover Capital Limited [2020] EWMisc 13 (CC), the tribunal said that the court should “have regard to” the valuation mechanism under the Code when determining rents for 1954 Act renewals of telecoms apparatus.
