High court rules against landlord in landmark insurance rent dispute

In a significant ruling for commercial tenants, the High Court found in favour of Picture House Cinemas Limited in its dispute with its landlord, London Trocadero (2015) LLP over inflated insurance - rent charges. The case, London Trocadero (2015) LLP v Picture House Cinemas Ltd [2025] EWHC 1247 (Ch), centred on whether the landlord was entitled to recover inflated broker commissions as part of the insurance rent payable under the lease.

Picture House Cinemas, tenant of cinema premises at the Trocadero Centre in London, challenged the inclusion of broker commissions which were incorporated into the insurance premium charged by the insurers and which were then charged to the tenant as insurance rent. The tenant argued that these costs were not contractually recoverable under the lease, which required payment of a proportionate part of the premium “payable” by the Landlord for insuring the premises. The court agreed, ruling that the lease did not permit the landlord to recover broker commissions and also that the arrangements were not at arm’s length.

The judgment emphasised that only genuine costs incurred by the landlord for the purpose of insuring the premises could be passed on to tenants. Since the commissions were rebated and not a real cost to the landlord, they fell outside the scope of recoverable insurance rent. The court ordered London Trocadero to reimburse Picture House Cinemas for the overcharged amounts.

Bearing in mind that the case may be subject to appeal, some of the takeaways to consider include:

• Landlords who have industry standard leases, which provide that commissions can be retained on the basis that insurance premiums are reasonable and proper (and reasonably and properly incurred), should not be impacted by the decision.
• However, landlords should also be aware that pursuant to the Code for Leasing Business Premises, England and Wales 2020, a landlord should disclose to its tenants whether it benefits from insurance commissions.
• Tenants should carefully review their leases to ensure that what they are being invoiced matches what is permitted as being recoverable.
• The FCA also requires brokers and insurers to give fair value to all stakeholders, which therefore includes tenants.

The decision also reinforces the importance of clear and precise lease drafting. Landlords must ensure that any recoverable costs are clearly defined in lease agreements, while tenants are encouraged to scrutinise insurance and service charge invoices closely.