Lenders and insurers are already considering the future impacts of climate change on property and it’s easy to understand why.
For many of us, purchasing a home is the largest and most valuable transaction we will make in our lifetime. In a world with a rapidly changing climate, property buyers will look to their solicitors to help safeguard that value.
The Law Society’s ongoing consultation on its forthcoming practice note related to climate risk advice is the latest sign that climate continues to emerge as a key issue in conveyancing with implications for solicitors in terms of their duty of care, duty to warn and duty to disclose.
Change can be uncomfortable. But it also presents opportunities. Solicitors who swiftly incorporate climate risk advice into their practices will be well-positioned for a future in which climate change risk is going to escalate further.
Modelling the future
Solicitors can only provide their best advice when they’re armed with the best available data, presented in a meaningful way.
This is where legal technology can make an important and worthy contribution to this emerging line of advice. At Dye & Durham, we deliver key insights from a mix of public and proprietary data that enable solicitors and their clients to make informed decisions with confidence.
This includes critical information on physical risks to property like contaminated land, and extends to climate risk, helping solicitors inform and advise their clients throughout the conveyancing process.
In 2020, we launched the National Ground Risk Model (NGRM): Climate™ to help mortgage lenders and insurers assess future climate-related risks on their portfolios of existing and prospective properties.
In 2022, we were the first to launch a comprehensive climate report providing future-facing insights on environmental risks, specifically relating to coastal erosion, flood risk, soil subsidence and extreme winds.
Most recently, we introduced our ClimateCheck™, an integrated climate solution available within our new flagship environmental reports EnviroAssure and Enviro360. These integrated reports deliver the key insights needed to support all residential transactions with a complete assessment of environmental risks.
By modelling future environmental hazards, legal technology unlocks the data solicitors need to help their clients understand how climate change could impact property values, financing and insurance coverage.
Assessing the data
How can solicitors evaluate the quality of a set of climate data, and the applicability of that data to their practices?
In other words, what information should they seek out to support their advice?
Here are a few key things to keep in mind:
Which risks are assessed?
The climate assessment they’re using should comprehensively cover at least the three key risks expected to the most impact on UK property as climate change progresses:
- flooding
- ground stability
- coastal erosion
While other factors can be relevant, they are unlikely to have as much of a bearing on the future insurability or saleability of a property.
Is the presentation of risks consistent?
The climate assessment should also be consistent in its presentation of risk.
This means the emission scenarios – known as RCPs, or representative concentration pathways – used to generate the prediction, and the time intervals over which those predictions are expected to materialise, should be applied consistently across the three key risk areas.
If they aren’t, the data is more difficult to understand and present to a client.
What’s the wider context?
Pay close attention to the tone and transparency of any climate risk assessment. The impact of climate change will ultimately be determined by global efforts to reduce emissions – or lack thereof.
The projections in a climate report add a significant value to the legal due diligence process, especially those modelled on the best available data, but the client should be made aware that the results are indicative, not absolute.
It’s important that a solicitor works with their client to incorporate these projections into the wider context and make a balanced assessment of the various risks and opportunities associated with a property.
What are the client’s needs?
No two transactions are the same, and solicitors must use their judgement to determine their clients’ individual needs.
This is equally relevant when reviewing climate-related risks to property.
The client should be engaged as early as possible to review the results of a climate search, discuss their potential ramifications and how they might affect their future ambitions to occupy, alter, develop or divest that asset.
Do you have all the details you need?
Find out if the provider of the climate risk assessment is reachable for further analysis and interpretation of the data.
Having this resource available can help keep the conveyancing process moving should more detailed questions be raised by the solicitor or their client at first review.
A well-structured climate report is a key tool solicitors should use to aid their understanding of climate risk and provide informed advice to their clients.
Knowing what the risks are and how they might change enables solicitors and their clients to be confident in their decision-making throughout the conveyancing process.
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