ECC valuation: tabular approach updated

Valuation under the Electronic Communications Code (the Code) remains a hot topic, and recent changes to the Landlord and Tenant Act 1954 mean that the valuation methodology established under the Code will now apply to more cases than ever before. 

That methodology has been the subject of guidance in a number of significant decisions, which set out the best valuation approach to take and indicate the most helpful evidence to use where such issues are the subject of court proceedings. The Tribunal continues to endorse a practical approach that limits both the scope and nature of valuation evidence.

First, it means the valuation exercise is inherently artificial. In practice, there are no lettings for the purposes of Code rights where the parties are unaware of the site's possible use for telecoms and do not negotiate on that basis.

Second, given that telecommunications equipment is often installed on rooftops or in small compounds in corners of fields, sites often have few, if any, possible alternative uses. The main value of most sites is likely to lie in their suitability for these communications uses, which the no-network assumption requires the valuer to ignore.

Third, guidance from the Tribunal as well as the market trend since the Code came into force has established that most telecoms lettings are now made for small amounts of money – small not only in the context of what those sites would have been worth under the old Code, but also the wider market.

This being the case, we should query the amount of time and effort parties put into calculating the price for an agreement when the cost of these negotiations can easily become disproportionate to the rent payable over the term.

This approach has become familiar to valuers experienced in Code valuations and forms the basis of many negotiations. The three stages are as follows.

1. Alternative use value: for many sites this may be nominal; but some may be capable of use as, for example, car parking spaces.
2. Additional benefit to the operator: sums are added to reflect how much more the telecommunications scheme would benefit the landowner than the alternative use; for example, there may be additional security.
3. Additional burden on the landowner: again, sums are added to account for any imposition the telecoms scheme would make on the landowner, beyond those of the putative alternative use. For example, the Code agreement may contemplate frequent access, whereas the alternative might only involve occasional access.

While the Hanover staged approach remains useful as a way of cross-checking land value when negotiating schemes, subsequent guidance from the Tribunal – discussed below – suggests that, in most cases, the level of detail it requires is not relevant. Rather, parties are now encouraged to use a table of previous Tribunal decisions and those values as the starting point for the type of site in question.

The experts in Affinity Water adopted a detailed approach to their valuations. They calculated the total expenditure at the site, identified which elements of that expenditure benefited the operators, and attributed a percentage to reflect that benefit, then divided that to reflect the number of operators using the site.

While the Tribunal engaged with the approach the experts had taken and used it to arrive at a value, it did not encourage others to follow the same course. On the contrary, the Tribunal found it to be 'exhaustive' and 'entirely detached' from what would happen in the hypothetical transaction.

Where they were negotiating such modest amounts, the Tribunal commented, it was not believable that the hypothetical willing parties would 'descend to the level of granularity' the experts had adopted.

By way of an alternative approach, the Tribunal provided what is now commonly known as the Affinity Water table. This identifies previous Tribunal decisions, other than consensual agreements, by general descriptions of the types of site, and lists the value the Tribunal attributed to them. The values are to be used as broad guidance for the level of consideration the Tribunal can be expected to determine.

As at the time of writing, the most recent version of the table is in paragraph 223 of the decision in On Tower UK Ltd v AP Wireless (UK) Ltd (Audley House) (ELECTRONIC COMMUNICATIONS CODE [2022] UKUT 152 (LC) although this should be read in the light of the decision in EE & Anor v AP Wireless II (UK) Ltd [2024] UKUT 216 (LC) ('Vache Farm'). 

In particular, the standard annual consideration for a rural site is now £1,750 and all the figures need to be reviewed for inflation.

The original figure of £750 derived from Dale Park, a case in which the Hanover methodology had been adopted. The site at issue in Dale Park had been found to attract a consideration of £1,200pa, comprised of a nominal £100 alternative use value, £600 for benefits to the operator and £500 for burdens to the site provider. 

The £500 burdens arose from the proximity of the mast site to a dwelling; had that feature been absent, the Tribunal expressed its view that £750pa would have been appropriate. 

In Vache, the Tribunal was asked to reconsider the basis of this figure. While it considered that the Affinity Water tabular approach had 'largely been successful' in 'expectation management', it also stressed that its mind was 'not closed' to a credible challenge to the levels of consideration awarded. 

The Tribunal was particularly assisted by evidence of various other types of lettings of small rural parcels of land, such as noise monitoring sites and weather stations. 

These provided a useful guide to the level below which the adverse consequences of letting a small parcel of land would be sufficient to dissuade a landowner from letting at all, although they did require adjustment to reflect the fact that those transactions were all for economic uses known to those parties, and for which there was no demand at the subject site. 

Overall, the Tribunal was persuaded that its earlier figure had been too low, and that it should be uplifted to £1,750.

The Tribunal also took the opportunity to 'reiterate the impact of inflation on figures determined in previous years'.

In light of the emphatic and repeated guidance from the Tribunal, it is now clear that the latest version of the Affinity Water table, suitably reviewed for inflation, must be the starting point for any Code valuation, and that good reason will need to be shown to justify a departure from those values. Even where a site does not directly correspond to a row in the table, thought must still be given to the tone of the table and how any proposed valuation compares.

The Tribunal has now given clear guidance that, under the Code, comparables are likely only to be useful as evidence of the value of a potential alternative use. Evidence of actual telecommunications lettings, however, is of no help: a clear statement to that effect can be found in Pendown, the site in EE Ltd & Anor v Stephenson & Anor, coupled with a warning that the Tribunal will not look favourably on the costs of preparing such evidence if presented in court.

This meant that when dealing with 1954 Act renewals, the court could consider comparable transactions concerning other telecoms sites in a more conventional way. 

Although such transactions take place in the 'shadow' of the Code (which affects such transactions both because of the reduction in rents brought about by the Code and because both the real and hypothetical parties will be aware of a possible reference to the Tribunal, which would result in a Code rent), no special valuation assumptions were required. 

A recent example of how this plays out in practice can be found in Cornerstone Telecommunications Infrastructure Limited v AP Wireless II (UK) Limited (Fleetwood County Court, 1 May 2026).

This has now changed with effect from 7 April 2026, owing to The Product Security and Telecommunications Infrastructure Act 2022 (Commencement No. 4, Saving and Transitional Provisions) Regulations 2025 coming into force. 

These regulations introduce amendments that effectively replicate the Code valuation provisions, in the case of 1954 Act, for renewals of telecoms sites under the 1954 Act regime.

As a result, the previous comparable-based approach is only of continuing relevance to cases where the date specified in the section 25 notice or section 26 request falls before 7 April 2026.

• The starting point is the Affinity Water table. The Tribunal is now issuing directions on this basis, requiring expert valuers to have regard to the relevant passages in Affinity Water and Audley House and to justify any deviation from the values in the table. As the table refers to the values of sites without having regard to 'any special features or particular sensitivities a particular location may exhibit', it may be that divergence is justified either because a given site is particularly unusual, or because it is of a type not yet found in the table; although that does not mean the table is irrelevant.
• Comparables are useful only as evidence of valuable alternative use. If, for example, it is contended that a site might be used for storage, then comparable evidence may be valuable to show that there would be demand for such a use at that site and what rent might be achieved. However, evidence of other telecommunications lettings is not helpful, and the costs of preparing it are unlikely to be recovered – even if they may be useful to parties negotiating consensual deals in the market rather than the hypothetical transaction with which the Tribunal is concerned.
• Hanover is now a secondary approach. While the three stages may be useful in negotiations and can provide a useful cross-check, they are in most cases that go before the Tribunal likely to involve an unrealistic level of detail given the small sums at issue. The higher-level approach of the Affinity Water table is preferred.

A version of this article was originally published on 23 February 2023