FTA: What should landlords know about responding to climate risk and possible changes in regulation?
JB: Most landlords hold properties for a long time because they're looking for capital gains as well as rental return. They therefore have a strong incentive to assess a property’s long-term exposure to climate risks and to what extent it may be affected over the coming years.
Regulation of climate risk in the housing market will come, the change is inevitable.
Landlords should start considering how they can upgrade and future-proof their properties to meet future requirements so they’re knowledgeable and prepared when the time comes.
Tenants should likewise be educating themselves. With the volatility of the energy market, fewer landlords include bills now as part of the rent, so the potential costs of an energy-inefficient property should be a key consideration for any British renter when they’re choosing a home.
FTA: What’s your general view on the state of the housing market and where it’s headed?
JB: Our largest financial institutions are facing ever-increasing regulations from the Financial Conduct Authority, Prudential Regulation Authority and Bank of England to disclose and report on the climate-related risks on their books.
Such requirements are still relatively new, but they will trickle down to reach every part of the industry.
There is some very important work being done in this space to support these institutions and help Britain’s housing market prepare for climate change.
I recently joined climate risk analytics provider Climate X as an adviser. They are doing remarkable work to help mortgage lenders and real estate firms understand and anticipate climate risks, meet regulatory requirements and build resilience in their front and back books.
We haven't yet seen in the UK some of the extreme events that we've seen this summer in Europe, such as the wildfires or the extreme heat, but that doesn’t mean we are sheltered from risk.
The UK already sees serious flooding events and high rates of subsidence, amongst other more localised risks throughout the country. The impacts of climate change are accelerating, and public awareness of such events is growing too.
It’s crucial that we work now to prepare Britain’s housing for the future.
Long-term thinking, standardised processes and access to quality data will play a vital role in understanding how and where properties need protection from future events, and ensuring properties remain mortgageable and insurable for the long term.
carmen.reichman@ft.com
