Introduction

In July of last year, it was the hottest year on record for the UK (and probably the busiest year for the Met Office). Temperatures hit 40°C across England and wildfires lit up the countryside.

To combat global warming, the Climate Change Act 2008 has committed the UK government to reducing greenhouse gas emissions by 100% (net zero) by 2050. However, The Law Society of England and Wales has emphasized that the Act requires the setting of legally binding ‘carbon budgets’ to act as milestones towards the 2050 target and as a result, at the date of this article, the next milestone is to reduce emissions by at least 68% (from 1990s levels) by 2030.

On top of that, in the World Economic Forum 2023 Global Risks Report, climate change is now recognised as one of the main global risks ranked by severity up to 2050, and environmental issues make up 6 out of the top 10 listed for the next 10 years.

Indeed, as more and more Teslas and Polestars are being parked up on British driveways, expect to see a radical shift away from the sooty industrialised ‘machine state’ of the 20^th century to a world full of ULEZ zones and smart homes over the next decade.  

New guidance

Apart from the above 2008 Act, there is no specific legislation on climate change with regards purchasing properties (this does come with a slight exception though – Energy Performance Certificates [EPCs] which measure the efficiency of energy usage in buildings). Thus, the legal principle of “buyer beware” still applies, meaning it is the buyer’s responsibility to investigate the property before they buy it.

What this means is that moving forward, your solicitor will have a duty to advise you on the potential risks and long-term use of the property regarding climate change (see below) and your solicitor will always look into these with a specialist search provider to ensure your purchase or new lease is protected.

Solicitors have legal duties to inform their clients as to what is in their best interest, and climate change risks are now no exception. The Law Society of England and Wales has recently published guidance aimed at property lawyers recommending that warnings are sent to clients during the course of their transactions of the very real consequences of climate change risks that could be affecting their property.

How can the risks associated with climate change be managed?

The risks associated with climate change predominantly surround the long-term usability and value of the property or land in question. Most of these will be physical factors such as flooding, subsidence, and even destruction of the land or property. However, regulation often comes with a price, and the impact of new and future climate change laws may mean levies on outdated properties and additional expenses on property conversions.  

If you are purchasing a property to occupy, what are you going to do in ten years’ time if the neighbourhood is under water? If you are investing in land, what value will you get out of it when new legislation comes in, demanding requirements which do not fit with your intended development? If you are a landlord with tenants, who bears the cost if the property is damaged by a freak storm?

Managing these risks by insurance may not always be possible if insurers deem our above examples or similar ones, as being uninsurable risks and thus, refuse to include cover for these in their policies. Alternatively, they may well offer cover but at a premium which could have significant financial impacts. As such, this is something parties need to be aware of and ensure they make appropriate enquiries of relevant insurers as to what additional costs may apply when advancing their transactions.

Similarly, other changes that may well appear owing to increased naturally occurring events are for new contract terms or provisos being introduced into legal documentation to cover parties. Whilst it is undeterminable as to what extent this may arise, what is obvious is, over time, there will probably be mechanisms in place which deal with the property when such risks manifest. At this stage, we suspect this will need to come down to a matter of negotiation between parties on a case-by-case basis initially, until enough matters have worked their way through the legal processes that bind them to create a more streamlined system of procedure and precedents.

Conclusion

As one can imagine, the role of a property lawyer in the mitigation of climate change risks therefore, not only extends to warning their clients of the possibility of the property being adversely impacted by such risks in the future, but also to act as a guiding hand to achieve the best outcome for their clients overall – checking legal terms, advising on searches and even suggesting what other third parties should be consulted during the course of the transaction.

DISCLAIMER: The information and opinions expressed in this article does not address individual requirements and is for informational purposes only. It does not constitute any form of legal advice and should not be relied on or treated as a substitute for specific advice relevant to your particular circumstances.