Landlord Commission and Insurance Rent: A Wake-Up Call for Commercial Landlords

Commercial landlords should take careful note of the High Court’s recent decision in London Trocadero (2015) LLP v Picturehouse Cinemas Ltd and others [2025] EWHC 1247 (Ch), which has significant implications for how landlords recover insurance costs from tenants under commercial leases.

Background

In this case, the landlord, London Trocadero (2015) LLP, arranged buildings insurance for the Trocadero Centre (a large, mixed-use commercial property). The landlord passed the gross insurance premiums on to its tenants as “insurance rent”, as permitted under the leases. However, the landlord (through its managing agent) had also negotiated substantial commission rebates from its brokers – up to 57.2% of the gross premium in one year – which it retained.

The tenant, Picturehouse Cinemas Limited, disputed its liability to pay insurance rent on the basis that it should not be required to fund commissions that were ultimately rebated to the landlord.

The Legal Issue

The dispute centred on whether the lease wording – specifically, the obligation to pay insurance rent based on the “premium payable by [the landlord] for keeping the Centre insured” – permitted the landlord to recover costs that were effectively reimbursed via commission. 

The High Court’s Decision

The High Court found in favour of the tenant on this principal issue. Key findings include:

• The term “premium payable” in the lease did not entitle the landlord to recover sums it had received back in commission, as these were not part of a genuine cost incurred.
• The landlord was not entitled to recover insurance rent representing costs it did not ultimately incur. 
• The Court held that it was necessary to imply a term into the lease requiring the landlord to act reasonably, by arranging insurance at market rates and on arm’s length terms.  This was required to give business efficacy to the insurance rent provisions. 
• The tenant succeeded in its restitution claim, seeking to recover the overpaid amounts on the basis of unjust enrichment. 

Implications for Commercial Landlords

This decision represents a clear judicial statement that:

• Recovering insurance rent on the basis of inflated gross premiums, while retaining commission rebates, is not compatible with standard lease wording unless expressly authorised. 
• Courts are prepared to imply terms into leases to curb landlord discretion and prevent unfair cost allocations to tenants.
• Commission sharing practices must be approached with caution, particularly where the economic burden falls entirely on the tenant.

While the Court recognised that commission rebates were common in the market, it made clear that standard lease terms do not entitle landlords to benefit at the tenant’s expense without explicit agreement.

Practical Takeaways

Commercial landlords should:

• Review lease provisions relating to insurance rent to ensure clarity and legal compliance.
• Consider whether current insurance arrangements and premium allocations reflect genuine recoverable costs and whether they are market-standard arrangements. 
• Avoid using insurance as a source of profit unless transparently disclosed and expressly permitted by the lease.
• Ensure brokers’ commission arrangements do not expose them to restitution claims or litigation risk.

For further guidance on drafting or reviewing insurance rent provisions, or to discuss the implications of this case in the context of your portfolio, please contact our Real Estate or Real Estate Dispute Resolution team. 

This article was written with the assistance of Peter Wilson, Solicitor, Real Estate Dispute Resolution.

The Landlord's Commission was...not "for … keeping the Centre insured"... it was "for" providing the Landlord with an opportunity to profit at the Tenant's expense.