Integritas: Climate Change and the UK Property Sector

Aiden Van Sertima at Integritas Property Group explores the impact of climate change on the UK property sector.

Climate change is significantly impacting the UK property sector, affecting investment strategies, property values, and the nature of construction and development. This impact is driven by both physical risks, such as increased flooding and extreme weather and transition risks associated with new regulations and shifting market demands.

Climate change is no longer something to worry about in the future; it’s something we need to address now. 72% of property professionals across England, Scotland, and Wales now recognise the urgent need to address climate change, with 49% of estate agents and 48% of mortgage lenders now advising nearly half their clients to consider climate change risks during transactions.

Projected climate impacts indicate that the UK’s annual average temperature has already increased by 1°C since pre-industrial times, with global warming expected to further raise this to +2°C to +4°C by 2100.

With these rapid changes, clients’ concerns and knowledge of climate change are now shaping the transactions we see within the property industry, with clients now increasingly worrying about flooding, energy efficiency and local planning/developments.

Estate agents and conveyancers flagged flooding as their top issue (66% and 62%), followed by energy performance (60%) and planning and development (55–58%).
For mortgage lenders, planning and development is the top concern (58%), with energy performance (56%) and flood or coastal erosion (50%) coming second and third.

Specific Climate Change Risks

Flooding: Approximately 1.9 million people in the UK reside in areas at significant flood risk (river, coastal, or surface water), and this number is expected to double by 2050. Rising sea levels and increased rainfall are making flood-prone areas more vulnerable, which in turn impacts property values and insurance: property damage, loss of access to work, education, healthcare, and risk of waterborne diseases.

Extreme Weather Events: More frequent and intense storms, heatwaves, and droughts are causing damage to buildings and infrastructure. We’re seeing extreme weather a lot more frequently and severely in the UK, and this is leading to higher insurance premiums, reduced coverage availability, or even refusals in high-risk areas and in some areas, declining property values in flood-prone zones, driven by repetitive repair costs and reduced investor confidence.

Overheating: Rising temperatures are making some properties, especially those with poor insulation, prone to overheating. There are 2,000 heat-related deaths annually; this number could more than triple by the 2050s without action. An extreme heat summer now has a 10-20% chance each year, rising to 50% by 2050, and 20% of UK homes already overheat even outside heatwave conditions.

Building Fabric Damage: Climate hazards such as dampness from flooding and rain, structural damage from windstorms, and subsidence from drought are all forms of building damage that we’re seeing more frequently.  Purchasers and investors are now demanding greater transparency on climate resilience, with sellers and developers expected to disclose risks like flood, erosion, contamination, and energy performance. Insufficient disclosure could lead to post-completion legal disputes, prompting legal reforms around disclosure duties.

Erosion and rising sea levels pose significant threats to properties, with projections indicating that over 7,000 properties in England could be lost to erosion by the year 2100. Government plans for managed retreat and shoreline protection are being developed, but the legal frameworks regarding property boundaries need to adapt to these changes.

Water Supply Risks:  Reduced summer rainfall heightens the risk of water scarcity and interruptions, particularly affecting private water supplies. The South East of England is already classified as water-stressed. Additionally, with the increased risk of flooding, water quality may decline due to contamination. Furthermore, areas that are prone to flooding may isolate communities.

Impact on Property Values and Investment

As climate change becomes more apparent, we’re seeing an impact on the value of property and the value of property investments being made.

Properties in high-risk areas, particularly those prone to flooding, are experiencing reduced values and increased insurance costs, with some areas maybe even becoming uninsurable if the issues continue.

Investors are increasingly shifting their investment strategies, factoring climate risks into their decisions and favouring properties with strong energy efficiency and sustainability features.  With the UK’s housing energy accounting for 23% of national greenhouse gas emissions, property purchasers are seeking eco-friendly upgrades—better glazing, insulation, and lighting—as both environmental and cost-saving measures.

In turn, this also affects mortgages and insurance. Mortgage lenders are starting to assess climate risks and advise clients on potential impacts, and insurance providers are now challenging vulnerable locations. Many insurers may now refuse coverage of flood risk, force premium increases, or adjust underwriting criteria.

Impact on Construction and Development

The construction industry is facing pressure to reduce carbon emissions and adopt sustainable building practices to combat additional pressures.

Government regulations are now encouraging developers to build more energy-efficient properties with lower carbon emissions, utilising sustainable materials, renewable energy systems, and energy-efficient technologies during construction. 

There’s also a push to improve the energy efficiency of existing buildings through retrofitting and renovations. 

What adaptation are we making, and how can these issues be mitigated?

Government regulations have come into play and are now implementing policies to promote energy efficiency, reduce carbon emissions, and adapt to climate change. 

The property sector is actively developing net-zero strategies and adapting to new regulations. 76% of UK businesses have now established a net-zero strategy, up from 52% in 2023. In conveyancing firms, 48% have published a net-zero plan, compared to just 17% in 2023.

Homeowners and businesses are also now encouraged to take steps to improve energy efficiency, reduce their carbon footprint, and adapt to climate risks.  72% of agencies and investors now prioritise insulation and energy performance when buying, with sought-after green features including sustainable‑build materials and energy-saving smart tech.

To address the increasing risks associated with climate change, it is essential to strengthen building regulations to mitigate the risk of overheating in both new builds and refurbishments. This entails integrating decarbonisation strategies with effective measures to prevent overheating, ensuring that our buildings are not only environmentally friendly but also comfortable for their occupants.

Enhancing flood resilience is crucial. This can be achieved through a range of property-level measures, alongside natural flood management techniques, and by enforcing sustainable drainage systems (SuDS) that effectively manage runoff and reduce flood risk.

Proactive assessment of building fabric risks should also be a priority. By integrating energy efficiency, ventilation, and moisture control, we can ensure that buildings are resilient and sustainable.

In addition, we need to reduce household water demand. This can be accomplished through the implementation of metering systems and promoting the use of water-efficient devices.

Lastly, in energy policy, employing adaptive pathways is essential. This approach aligns the goals of achieving Net Zero, adapting to climate change, and adjusting to evolving energy demands, paving the way for a more sustainable future.

Whether we like it or not, climate change is reshaping the UK property sector, necessitating an urgent revaluation of investment strategies, property values, and development practices. With rising temperatures, increased flooding, and extreme weather events, the risks are not just future concerns but immediate realities affecting both consumers and industry professionals. The growing awareness among property stakeholders—evidenced by the significant percentage of agents, lenders, and clients factoring climate risks into their decisions—highlights a shift towards prioritising sustainability and resilience. As properties in high-risk areas face declining values and escalating insurance costs, the demand for eco-friendly features is increasing, further influencing market trends. As we look forward, transparency around climate risks and adapting legal frameworks will be essential in mitigating potential disputes and ensuring a more sustainable property landscape.

Deakin’s Yard: A Showcase of Environmentally Conscious Construction

Deakin’s Yard by Integritas Property Group is a standout example of environmentally conscious development. Instead of building from the ground up on a new site, IPG is completing an existing structure, minimising environmental disruption and reducing the carbon footprint associated with new-build construction.

As a large student development, Deakin’s Yard also delivers long-term energy benefits. The project incorporates energy-efficient systems and modern building standards, resulting in lower overall CO₂ output per resident compared to traditional housing. By repurposing the structure and designing with efficiency in mind, the scheme not only reduces construction waste but also supports a more sustainable way of living for its future occupants.

This approach reflects IPG’s commitment to responsible development, delivering high-quality, future-focused housing while protecting the environment.

Visit www.integritaspg.com for more information.