In London, you are never likely to be more than 6 feet from telecoms equipment. We have become accustomed to looking out of our windows over a sea of telecom aerials. In the past, landowners were eager to grant leases to telecoms operators to obtain an extra source of income from otherwise often wasted space. Since the introduction of the new Telecoms Code in 2017, this has no longer been possible and leases to telecoms operators have fallen out of favour. Can the new boy in town, the “Vertiport”, provide a new solution for landowners?
Vertiports (landing ports for drones) are likely to become increasingly necessary as commercial drones take to the skies. What was once more of an April Fool: Amazon’s 2015 advert delivering Jeremy Clarkson’s new trainers by drone; is now reality. The Property sector is going to have to adapt to deliver the infrastructure required. And, perhaps, 20 years from now, you will never be more than 6 feet from a vertiport!
The new Telecoms Code is driven by governmental desire to make high quality electronic communications services available to the public. The effect is to put telecoms providers in a powerful position. Telecoms providers can now apply to Court to require landowners to grant them rights to enable them to install telecoms equipment. Landowners are fairly powerless to stop this, if they have no plans to redevelop; they can be adequately compensated by money; and the public benefit from the telecoms equipment will outweigh any prejudice they suffer.
What is more, is that once the equipment is installed, there is a very limited ability to terminate the telecoms provider’s rights. If, for example, there is an intention to redevelop a building or area, whilst it is possible to serve notice to terminate their rights (as redevelopment is a specified ground for termination), the notice period is lengthy at 18 months.
More frustratingly, the income that landowners can expect to receive from telecoms providers has dramatically decreased. It now equates to the market value of being bound by the telecoms lease. However, legislation dictates that in doing so, the following assumptions are applied (amongst others): (a) the rights to be granted do not relate to the provision or use of an electronic communications network; and (b) the telecoms provider has alternative sites it can use. In a recent case in the Upper Tribunal (Lands Chamber) it was held that it was necessary to ignore the presence of other telecoms providers, who might also want to use the site for their networks, although the Courts could have regard to rental values achieved for other uses. In absence of many other competing roof top uses, the consideration for telecoms leases has reached rock bottom.
It would therefore seem that vertiports could be useful to landowners in a couple of ways. Firstly, their presence on rooftops may mean that physically there is no space for telecoms providers to install their equipment. Secondly, how much vertiport providers might be prepared to pay for rooftop sites could potentially drive up the market value of rooftop space and increase the amount that telecoms providers would be required to pay to landowners.
Due to vertiports being new to the market, the legislation has not yet caught up and there is no vertiport focused legislation in play. No doubt legislation will be rolled out in due course. There is, however, always the risk that any new legislation is even less favourable to landowners than the current telecoms legislation. Early indications are that the government wishes to stay at the forefront of the drones’ market; perhaps when they have exhausted all Brexit related topics, they might even want to ensure a world class drone service? Who knows!
If you are landowner, who wishes to grant a lease of part of your rooftop to a vertiport provider, as an alternate rental stream to a telecoms lease, there are a number of considerations that you might want to take into account:
- Purpose – What is the purpose of the vertiport? Is this part of a network of vertiports? If so, is your building in a desirable location? It is thought that drones will be first used for transporting medical supplies (this is currently happening in Switzerland). Is your building near a hospital or a blood bank? Alternatively, are you proposing to offer this as a service to tenants in the building? Some business improvement districts have been looking for more environmentally friendly options to tackle the number of Amazon style deliveries that every employee receives each day. Perhaps this is the golden ticket they have been looking for?
- Access – The purpose does matter. Ultimately, someone will be responsible for collecting parcels from the rooftop. If the deliveries are for the tenants of the building, then that person will likely be the building staff. If, however, this is a commercial venture it may be third parties wanting to access the rooftop. Can they feasibly do so without going through areas that have been demised to the tenants? Or, if they do need to go through an area demised to the tenants, are there sufficient reservations in the lease to permit this and are there any security concerns?
- Health and Safety – Is it safe to allow people onto the roof to collect the parcels? Or, will work need to be carried out to the rooftop to ensure that it is safe and that you will be in compliance with the relevant health and safety legislation?
- Insurance – This has a direct impact on insurance. Will the use of the rooftop as a vertiport be covered by the building insurance? In addition, does the insurance you have in place in relation to occupiers and third party liability cover access to the roof? Will your insurance premiums rise dramatically as a result of using the roof in this way? Given that this is a relatively new market, you may find that insurers have little experience with vertiports and that it might be a steep learning curve for them (if they are not totally risk adverse to them).
- Reputation – The problems Gatwick Airport had with drones has been widely reported in the media. With this in mind, from a reputational perspective, landowners may want to carry out some due diligence on the vertiport provider. They will want to ensure that the drones are operated in accordance with all applicable laws and guidance of the Civil Aviation Authority and the necessary permits, permissions and licences are obtained.
- Planning Permission – On similar lines, landowners will also want to ensure that the vertiport providers obtain the necessary planning consents. As you might expect a vertiport is outside the existing use class system and so a sui generis consent may be required to the use, in addition to consent for any permanent structure being installed on the roof to facilitate the landing of drones.
- Location – Of course, a building might naturally be ruled out from being a vertiport by virtue of its location. Civil Aviation Authority rules prevent drones flying within a specified distance of airports and there are a number of other areas where drones are prohibited from flying.
- Neighbourly Agreements – In theory, landowners may need to consider whether a neighbourly agreement is required (albeit that this may be left to the vertiport provider to negotiate). This might be likened to a crane oversailing licence which developers are well versed in securing. Strictly speaking, if the drone enters into the airspace above a neighbouring building (and the airspace is included within that neighbours title; that being the default position), the neighbour’s consent will be required. In practice, however, there are many situations where a landowner's airspace rights might be infringed and we would expect any legislation introduced to encourage a network of vertiports to legislate to make clear that drone operators can enter into airspaces without the consent of the landowners'.
- Structurally – Landowners should consider the suitability of their rooftops for vertiports and may like to put an upper limit on the weight of the drone landing on the rooftop.
- Nuisance – Landowners will also need to consider how vertiports might impact upon the tenants in the building. Is this likely to cause them a nuisance? Landowners that wish to future proof their leases might like to consider including a reservation enabling them to use the roof as a vertiport notwithstanding the disturbance and nuisance that this might cause to the tenant.
- Security of Tenure – Landowners might also want to ensure that any lease to a vertiport provider is contracted out of the Landlord and Tenant Act 1954 to ensure that the vertiport provider does not have security of tenure. This will make it relatively easy for landowners to remove vertiport providers from the roof at the end of the lease and make redevelopment possible. This is currently one of the key benefits of a vertiport lease over a telecoms lease: with the latter it is impossible to contract out of the security of tenure provisions.
To summarise, lettings of rooftops to vertiport providers is a new and exciting emerging market although the legal and property industries will need to work to keep up with this developing market. For now, it is certainly something to watch and perhaps even the magic bullet in reviving the rooftop market. Telecoms operators need to watch out – they no longer have a monopoly over these spaces!
A shorter version of this article was published in CoStar in October 2019.