Climate change and conveyancing: challenges for law firms are heating up

2022, the year Europe was plagued by record-shattering heatwaves, the UK saw its first day where the mercury topped 40 degrees Celsius, and October closed out in an unusually warm fashion. The effects of the climate crisis are increasingly apparent and it’s essential that law firms are aware of the impact climate change will have on conveyancing now and in the coming years. 

The Met Office predictions indicate more heatwaves are set to bring hotter, drier weather. This increases the potential for soil shrinkage and downward movement of buildings situated in vulnerable areas, such as clay soil regions found across the South East of England. With this movement comes risk. Risk of moving foundations, risk of cracking walls, and risk of costly repair bills and insurance claims. 

Changing weather conditions also brings a greater risk of flooding. There have been 51 flash flood incidents since 2007 according to a report released by Bright Blue. The Environment Agency estimated that 5.2 million properties in England are at risk of flooding, much in relation to issues around urban drainage problems. The government has also boosted investment in flood prevention to £5.2 billion up to 2027. All indications point to a need for change in the way climate risks are treated during the conveyancing process.  

Why do conveyancers need to be better informed of climate change for property transactions? 

There is a growing trend towards the opinion that conveyancers have a duty of care in relation to advising their clients on the environmental risks associated with a property. Groundsure conducted a poll at the Conveyancing Climate Change Conference in June 2022, where 68% of lawyers felt they have a duty of care to advise clients on climate risks. 

Attitudes are already shifting among conveyancers who are clued into the potential impact climate change will have on the property market. The duty of care will evolve over time as new risks are presented and the market responses change. However, acknowledging early in this transition that there is a responsibility to their clients to inform them about climate risk, law firms will be better placed than peers who choose to bury their head in the sand when it comes to the effects of climate change on the UK property market. 

Beyond the duty of care, we will also see more lenders deem climate change a tier 1 risk. Several lenders are already assessing risks related to climate change for commercial property transactions, with the call for the same scrutiny to be applied to residential transactions. As the frequency and magnitude of climate events increases, the security for the lifetime of the loan and potential resale will become a key compliance focus. Conveyancers will be required to take this into consideration on future transactions. 

What is the biggest challenge for law firms related to climate change? 

The greatest challenge law firms face when it comes to the impact of climate change on property transactions is understanding the risk and being able to communicate that to their client. Without this crucial awareness and comprehension of the potential issues, firms will be in the dark about how to appropriately inform their clients and administer a duty of care. 

Industry bodies, like the Law Society and suppliers are already working behind the scenes to pre-empt the changes that will inevitably follow. Groundsure has launched their ClimateIndex analysis module within their Avista environmental searches. ClimateIndex anticipates changes in physical risks posed by climate change – the most serious of which are flooding, ground subsidence, and coastal erosion – and gives an overall score for the effect on a property, assessing the probability of climate risk to a property over 1, 5, and 30 years. 

Law firms will be able to navigate the newfound challenges related to climate change by making use of services such as these to ensure they are reliably informed so they can deliver a duty of care to their clients. 

How can law firms manage these challenges? 

Using commercial tools now available can help law firms to educate and inform their clients of the risks and legal implications of climate change, such as producing easy-to-understand title reports. The challenge is most difficult when it comes to the duty of care related to residential property transactions.  

Commercial clients, such as developers, will have more experience of these issues as they will increasingly face challenges related to climate risk. For residential home movers however, the responsibility lies with their conveyancer who should be aware of the risks and take steps to warn their clients and advise them on how to respond. 

For more information on climate risk for residential property transactions and commercial real estate catch up with our on-demand webinars with environmental law specialist Stephen Sykes.  

You can get a head start on keeping your clients informed of climate risks with Groundsure’s ClimateIndex report which is now available via InfoTrack. Get in touch for more information.