News & Views

Insurance Commission disclosure ruling has ramifications for property industry

A landlord has been ordered to repay nearly £700,000 in undisclosed insurance commissions.

The case

In London Trocadero (2015) LLP v Picturehouse Cinemas Limited, the key issue was whether a landlord could lawfully retain insurance commissions received from insurers as part of the premium recharged to tenants.

Landlords commonly arrange block insurance policies and recover premiums through service charges or insurance rent clauses in leases. What is often not disclosed, however, is that landlords may receive commission rebates from insurers, effectively turning the insurance into a profit centre.

In this case, the High Court judgment at the end of May 2025 found:

•         The lease did not expressly permit the landlord to retain commissions.
• The commission was not linked to any legitimate service provided to the tenant; and
• As a result, retaining the commission amounted to an improper profit.

Why it matters

This is not just a property law issue, it is a contractual governance and disclosure risk, particularly for corporates, funds and regulated firms with commercial property interests or landlord responsibilities.

It also raises broader legal and regulatory questions:

•      Fiduciary duties and conflicts of interest, especially where the landlord is acting as trustee, nominee, or managing agent.
• Fairness and transparency in commercial contracts, particularly where fees or commissions are embedded.
• Regulatory risk under FCA principles and PRA expectations on transparency; and
• Litigation exposure, as tenants or investors may seek to challenge past charges.

This ruling reflects a broader trend towards fairer commercial practices and contractual clarity in property arrangements.

Key takeaway

Corporate landlords and real estate investment trusts (REITs) should review their lease wording and insurance arrangements across portfolios. If commission retention is intended, leases must include clear and express provisions authorising it.

Further information

This ruling marks a significant shift in how insurance commissions in commercial leases are viewed legally, commercially, and regulatorily. It introduces new risks for landlords and managing agents, while reinforcing the importance of transparency and contract clarity.

The views above provide an overview of the current legal landscape and do not constitute legal advice. For further information, please email Charntai Jowett or Sally Lazar or call 0151 906 1000.