FTA: What should brokers know about current forecasts when it comes to climate change and the housing market?
JB: Robust climate-risk data and modelling will become vital to mortgage brokers’ operations and the resilience of the entire housing market over the coming years.
I first saw the impact of extreme weather more than 20 years ago while working with the Association of British Insurers during the floods of 2000-01.
There wasn’t quality data widely available at the time to help the market forecast such an event, and I saw firsthand the devastating effect it had on homeowners and the cost to insurers.
Lenders will increasingly look at climate risk when reviewing a mortgage application on a property, so it will be important for brokers to understand the implication of those risks as well.
They need to have a clear view of what limitations or restrictions might be in place, depending on how exposed a property is to climate-related weather events, in order to inform and guide their clients.
Environmental risk reports are a standard part of any conveyancing process, but there isn’t currently a standardised requirement to assess or declare a property’s climate risk specifically. Industry awareness of this risk field is still relatively low, but it is developing.
People have a tendency to think very short-term, but oftentimes climate-related events will impact a property many years into the future.
Many brokers work in very specific regions or areas, so those who want to be ahead of the curve should educate themselves now on the key localised climate risks affecting (or forecast to affect) the area they work in, so they can pass that knowledge to their clients during the buying process.
FTA: What should brokers be telling their clients about climate risk?
JB: The most important thing is to raise clients’ awareness of climate risk and ensure it's a key consideration in the buying process.
Brokers should be encouraging their clients to do their research, to share whatever resources they have available to help them identify and evaluate the kinds of risks their property may be exposed to.
They should also be broaching conversations with their clients about upgrade work that may be needed in the future, whether that's retrofitting to make a property more resilient to the changing climate or to improve its EPC rating.
There are no hard and fast rules about how to navigate climate risk in the housing market right now, but as requirements for lenders and banks to report on such risks evolve and become standardised, the entire industry will need to evolve and adapt its processes in response.
