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Landlords on alert over high court ruling on commercial property 'insurance rent'

Judge rules Picturehouse was overcharged on insurance rent over period of years
The case centred on the Trocadero centre in London's Leicester Square. (CoStar)
The case centred on the Trocadero centre in London's Leicester Square. (CoStar)
CoStar News
May 27, 2025 | 1:46 P.M.

Landlords and tenants will be closely scrutinising a High Court ruling in favour of the tenant, focused on the payment of commercial property insurance premiums.

The ruling on Friday effectively found that tenants of commercial premises within larger buildings or portfolios may have been overcharged insurance rent by as much as 60% by their landlords.

The decision was made in the case of Picturehouse Cinemas, part of the Cineworld group, in a court battle over so-called “insurance rent". The case focused on Cineworld’s flagship 62,000-square-foot Picturehouse Central cinema in London’s 588,000-square-foot Trocadero Centre, leased from Criterion Group.

Picturehouse wants unspecified amounts paid back by Criterion, saying it has overpaid a decade's worth of “insurance rent”.

Broadly speaking, a landlord is obliged to obtain insurance for the whole of an entire centre or portfolio and is entitled to recover the cost of doing that from tenants. The dispute focused on the tenant's liability or otherwise to pay the insurance rent. The dispute formed part of a wider dispute, reported on here, following a claim by the landlord for recovery of arrears of rent, including insurance rent, and other sums which had accrued during thepandemic. Picturehouse originally raised its arguments concerning insurance rent as a counterclaim to proceedings brought by Criterion Capital.

On Friday, Justice Richards found that the landlord had ultimately inflated insurance premiums by adding commissions, leading to a repayment of over £700,000. The ruling is thought to have exposed a widespread practice that may mean others are entitled to reclaim similar overpayments from landlords. It focuses in particular on how much commission paid to a broker by the landlord for placing the insurance can then be passed on to the occupier.

On Linkedin, Benjamin Faulkner, a barrister for Wilberforce Chambers, which represented Picturehouse, said the ruling meant tenants of commercial premises forming part of a large building or portfolio might have been overcharged insurance rent by as much as 60% over a period of years.

Chris Perrin, real estate disputes partner at Addleshaw Goddard, said in a statement that the dispute was not the first dispute between the two parties to reach trial, and it almost certainly would not be the last, but the judgment, subject to any appeal, has the potential for "far-reaching consequences for landlords and tenants and could open the floodgates to similar claims".

He added: "Payment of commissions for placing insurance is not unusual, but the level of commission in this case, together with the Court's finding on the degree of the landlord's control, may be.

"I would expect landlords and tenants to scrutinise this decision carefully to see if it may impact any of their properties. Given that limitation periods will start to erode potential claims, I would also expect a number of claims to follow."

London Trocadero (2015) LLP said in a statement: “Whilst we respect the decision of the Learned Judge, we disagree with it. Indeed, no doubt many in the industry will be surprised to learn that a 'premium' for keeping a property insured does not include any portion of brokerage which is legitimately shared by insurance brokers with their landlord clients. We will be seeking permission to appeal the decision.”

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