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Many lenders are now considering the risks linked to the impacts of climate change when deciding whether a property is acceptable for a mortgage.
Here, we look at:
Some of the ways a property could be affected by climate change include flood, coastal erosion, landslide or subsidence and sinkholes.
According to the Environment Agency in England, the UK is experiencing more frequent flooding, leaving millions of properties at risk of flood.
You can check the risk of flood in your area with the Environment Agency or one of their sister organisations across the UK. They also offer guidance on preparing for a flood and what to do during and after a flood.
To check the risk of flood in your area visit:
You can also visit the National Flood Forum – a charity that helps, supports, and represents people at risk of flooding.
Keep in mind that, if your property is at high risk of flooding, it could be more expensive or harder to insure. Flood Re is a joint initiative between the government and insurers that aims to make the flood cover part of home insurance more affordable.
Visit Flood Re for more information.
Coastal erosion is the loss or movement of land due to wind, waves and tides. According to the Environment Agency, we have some of the fastest eroding coastlines in Europe with hundreds of properties currently at risk of coastal erosion.
To check the risk of coastal erosion in your area visit:
You can also view the Shoreline Management Plans (SMPs) for information on how coastal erosion risks will be managed in your area.
A landslide is the movement of rock, debris, or soil down a slope. It’s caused by various things, including heavy rainfall or drought, which make the land unstable.
You should seek specialist advice from a structural surveyor or geologist if a landslide happens on or near your property and especially before you start any major building or drainage work.
Subsidence and sinkholes occur when the ground below a property caves in, or sinks, reducing the value of property and land.
Soil expands in wet weather and contracts in dry weather. With the UK expected to see wetter winters and drier summers, according to the State of the UK Climate report, the soil beneath our homes can become unstable.
Properties built near large trees (where the roots disturb the soil) or on top of old mining quarries, may be at risk of subsidence and sinkholes.
More and more lenders are now carrying out checks to assess whether a property is at risk of a climate change event that could affect their decision to offer a mortgage on that property.
As a result, it can be harder to get a mortgage on a property that’s at a ‘high risk’ of being affected by climate change, especially if it cannot be insured due to flooding or the land being unstable.
If you’re purchasing a property, your solicitor or licensed conveyancer may carry out environmental searches to check for any potential issues, such as flooding or old mine workings that might affect the property. They will then advise whether any specialist reports are needed to understand the impact on the property.
Following their own assessment of the risks or those noted in any specialist report requested by your solicitor or licensed conveyancer, your lender may consider that the property is at too high a risk from the effects of climate change. They may ask you to confirm that you have a suitable home insurance policy in place, or they may decline your application.
If you’re concerned that the property could be at risk of climate change, you should consider instructing a surveyor to complete an in-depth survey.
If a landslide is happening on or near the property, let your mortgage lender and insurance company know when you apply.
If you’re worried that your property could be at risk of climate change, check your home insurance policy. Most policies cover events caused by climate change. However, not all do, and some may have exclusions and limitations. It’s important to check your policy to make sure you have suitable cover, in case you ever needed to make a claim.
It’s usually a condition of your mortgage that you have buildings insurance. If you don’t, you should arrange cover as soon as possible as your lender may ask you for a copy of your home insurance certificate. If you have an HSBC mortgage, make sure your new policy covers the full re-instatement value of your home.
If you need more help, speak to an independent insurance broker. You can also get free and impartial help from organisations, such as MoneyHelper or the Citizens Advice Bureau.
Explore: How much home insurance do you need?
If you have an HSBC UK mortgage, you need to make sure buildings insurance cover is maintained throughout the mortgage term.
The minimum amount of cover must be the reinstatement value of the property, which means the insurance cover must be enough to cover the cost of rebuilding the property in its entirety.
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