What does climate change mean for UK property owners and lenders

The science underpinning climate change has been well known for decades, but it is only in more recent times that its practical, physical impact on land and buildings has been experienced.

In the UK, we are already experiencing wetter winters (resulting in more flooding) and drier summers (resulting in more ground instability and subsidence). In 2022 the UK has experienced the highest temperatures since records began.

The environmental data company, Groundsure, has estimated that 2.4 million properties will experience physical climate impacts between now and 2050. This number does not take into account properties affected by overheating or damaged by wildfires.

Global temperatures have increased by 1.1°C above preindustrial levels. They look set to increase by 1.5°C – 2°C before the end of the century. The effect on UK land and buildings will be significant as these physical risks worsen in scale and frequency. In extreme cases, there will be “stranded assets“ – properties which become possible to mortgage or insure in the future and which lose value as a result – and at worst loss of property and risk to life.

To help the property market to assess climate change risk to specific properties or portfolios, new screening tools are now available. There is a strong case for saying that property lawyers owe a duty of care to their clients to advise clients about climate risk and to use these tools. The Law Society is currently working on new Practice Notes for climate risk which lawyers will do well to follow.

Please contact our environment and climate law consultant, Stephen Sykes, for more information about environmental risk mitigation.