A recent High Court ruling in favour of cinema chain Picturehouse has sent ripples through the UK commercial property sector, with landlords now being urged to reassess how they disclose insurance commissions in tenant agreements. The legal dispute centred on Picturehouse Central—operated by Cineworld—and its landlord, London Trocadero LLP, over alleged overcharging on insurance premiums.
The judgment, which reportedly orders the landlord to repay more than £700,000, raises major questions about how insurance costs are bundled into rent and service charges—especially where commissions are taken but not disclosed. While the case involved a commercial tenant, the ruling carries serious implications for small-scale landlords and property investors, particularly those managing mixed-use portfolios.
“This is a landmark decision that landlords can’t afford to ignore,” said Parmjit Gill, Head of Commercial Property at law firm Harper James.
Undisclosed insurance commissions now under scrutiny
At the heart of the case was the level of commission allegedly embedded in the insurance rent. According to Gill, landlords were “receiving large insurance commissions—sometimes up to 60% of the premium—[which] were potentially overcharging tenants, who believed they were simply covering the cost of insuring the building.”
She added that “such commissions, which were not properly disclosed or justified, could be challenged and reclaimed.” The judgment now sets a clear precedent: landlords who fail to be transparent may face repayment demands from commercial tenants, especially if insurance is arranged through managing agents or brokers.
Although the ruling applies to commercial property, residential landlords should take note, particularly those who let via company leases, manage HMOs, or hold property in mixed-use blocks where commercial leases coexist with ASTs.
Tenants gain leverage as landlords face compliance test
While the decision has been welcomed by tenant groups and commercial occupiers, it also represents a potential compliance headache for landlords. Many lease agreements may contain ambiguous language around insurance premiums or allow too much discretion in how charges are applied.
“The key takeaway is this: both landlords and tenants need to revisit the terms of their leases and ensure insurance arrangements are not only fair but fully disclosed,” Gill advised.
In practical terms, landlords are being encouraged to review service charge clauses, audit historical insurance arrangements, and if necessary, renegotiate terms to avoid future litigation. For smaller landlords, this could be as simple as asking brokers for itemised breakdowns and keeping clearer paper trails when issuing service charge summaries.
Transparency now key to avoiding future disputes
As the commercial property world digests the implications of the Picturehouse ruling, landlords—especially those who self-manage or work closely with agents—will need to ensure transparency and accuracy in their lease documentation.
“This decision marks a shift toward greater accountability,” Gill concluded. “Small business landlords who get ahead of it will be in a much stronger position moving forward.”
With margins tight and tenant relationships under strain in many sectors, especially post-pandemic, even inadvertent oversights could come at a high cost. But by taking a proactive, honest approach, landlords can protect their interests while also maintaining trust with tenants.
