Landlords profiting from premiums? The High Court says "no" in Trocadero landmark decision

In this article, we discuss the recent ruling in London Trocadero (2015) LLP v Picturehouse Cinemas Ltd [2025] which scrutinised the legality of landlords accepting insurance commissions and charging tenants for insurance administration fees, and consider the potential implications for both landlords and tenants.

Background

In May 2025, the High Court delivered an important ruling in London Trocadero (2015) LLP v Picturehouse Cinemas Ltd [2025], on whether landlords can legitimately pass on insurance commission costs and administration fees to tenants via the insurance rent due under their leases. 

In this case, the High Court examined whether a landlord could recover the full cost of an insurance premium from its tenant, a cinema in London’s Trocadero Centre, despite having itself received broker commission rebates in a sum up to 60% of the insurance premium.  

The High Court upheld the tenant’s objections to the landlord profiting in this way at its expense, ruling in favour of the tenant, and finding that this element of the insurance rent was not actually a premium 'payable' by the landlord nor was it a sum for the purposes of insuring the Trocadero Centre. It was also held that there was an implied term in the lease to the effect that a landlord ought to act reasonably by arranging its insurance 'at arm’s length' by acting in a commercial interest only, not a profit-minded one, to obtain insurance at market rates.  

As a result, the landlord was found to have profited unfairly and was ordered to reimburse the tenant for the overcharged and inflated insurance rent, amounting to hundreds of thousands of pounds and sparking potential major implications for commercial lease arrangements across the UK. 

What landlords should consider

Precise lease drafting

Landlords may have a strong argument that they should be genuinely entitled to commissions and fees where, for example, they arrange block insurance across their portfolio to procure a lower insurance rate, or they take steps to secure a more competitive rate for their tenants.

Landlords should review their leases and where appropriate consider including explicit drafting to permit the recovery of any broker commissions and the landlord’s administrative fees. Ambiguity or omission may make it difficult to recover these charges.   

The Model Commercial Lease (MCL) available for use in England & Wales includes provisions to the effect that landlords can retain commissions for their own benefit but only if the premiums are 'reasonable and proper.' Following the Trocadero ruling, this could arguably preclude a landlord from charging inflated premiums which enable it to take a hefty commission, and require the insurance rent to reflect actual costs. 

Transparency regarding insurance arrangements

There is likely to be a call from tenants for clearer, more transparent billing from landlords, including the provision of full breakdowns of insurance costs (perhaps signifying a shift towards service charge practices and provisions in leases) and disclosing any commission arrangements with brokers to tenants. Landlords wishing to recover commissions and administration fees may need to justify this by reference to particular services they have provided in exchange for better value insurance, to avoid practices that could be construed as unjust enrichment.  

Risk of retrospective claims and risk management

Landlords may face legal claims from tenants for any previously overcharged insurance rent. Landlords should review their historic insurance rent charges to tenants and be prepared to justify these where necessary. Landlords should also review their current insurance arrangements to ensure compliance with lease terms and to avoid future disputes with their tenants.

What tenants should consider

Right to challenge charges

Tenants now have a precedent to challenge inflated or unjustified insurance rent charges. If commissions or additional fees are not explicitly permitted in their leases, tenants may be entitled to recover overpayments. Tenants should seek legal advice about the limitation period that applies to their claim.

Due diligence and lease review

Tenants are advised to review their current insurance rent clauses and pay attention to these provisions when negotiating future leases, allowing for the provision of full breakdowns of insurance costs and the disclosure of any insurance commissions, in addition to scrutinising insurance rent invoices. It remains prudent for tenants to seek legal advice regarding lease terms and potential claims on existing leases, as well as negotiating new leases. 

Final thoughts

The ruling has prompted scrutiny of long-established industry-wide practices regarding the recovery of insurance rent in commercial leasing. 

Both landlords and tenants must now navigate insurance rent practices going forward with greater transparency, diligence and awareness. It remains to be seen how market practice and lease drafting will evolve as a result.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

Farrer & Co LLP, September 2025.