What Climate Risks Mean for Home Buyers and How to Navigate Them

The process of buying a home is complex enough without adding climate risks to the mix. 

Yet, with the increasing impact of climate change, home buyers need to be aware of how issues like flooding, subsidence, and coastal erosion could affect property values, mortgage approvals, and even long-term livability. 

Understanding these risks and knowing how to handle them can save you time, money, and stress. Here’s what you need to know and how conveyancers can help.

Climate Change and Property Value

As a home buyer, one of your biggest concerns is likely to be the long-term value of the property you are considering. However, climate risks pose significant threats to this. For example:

• Flooding: Properties in flood-prone areas may face repeated damage that requires costly repairs. This could lower the property’s appeal and value over time.
• Subsidence: The shifting of soil under a property, often worsened by extreme weather patterns like heatwaves or heavy rainfall, can lead to structural damage. Homes in areas particularly vulnerable to such conditions may be harder to resell in the future.
• Coastal Erosion: If you’re thinking about buying a picturesque coastal property, consider how rising sea levels and erosion might lead to land loss. A stunning shoreline location today might not look the same 20 years from now.

A property in a high-risk location might cost less upfront, but the long-term financial risks could outweigh short-term savings. These risks don’t just affect value; they can also make securing a mortgage more difficult.

Climate Risks and Mortgage Approvals

Climate-related risks are increasingly influencing lenders' decisions. Banks and other lenders are becoming more cautious about issuing mortgages for properties that could lose value due to climate change. A home at high risk for flooding or erosion, for instance, might only qualify for a mortgage with higher interest rates or stricter terms. Worse, you could be denied a mortgage altogether if the property is deemed too risky.

Lenders are also relying more on climate risk assessments. They are looking ahead to predict which properties might depreciate over the next few decades. If a home you are interested in falls into this category, it’s vital to understand how this could affect your ability to secure financing.

Navigating Climate-Related Challenges as a Home Buyer

While these risks may seem daunting, you are not alone in navigating them. There are steps you can take to make informed, confident decisions:

1. Do Your Homework on Risk Factors

Before committing to a property, research any potential climate risks tied to its location. For example:

• Is the home in a flood-prone area? Check flood maps and recent reports from local authorities.
• Has the area experienced subsidence issues in the past?
• If it’s a coastal home, look into local erosion patterns and projections.

This information can help you weigh the risks versus rewards before making an offer.

2. Request a Flood Risk Assessment

If you’re considering a home in an area with a history of flooding, ask for a flood risk assessment to understand how vulnerable the property might be. This report can also provide an indication of how much flood insurance might cost, which could impact your monthly expenses.

3. Check Insurance Costs and Availability

Homes in high-risk areas may require expensive insurance policies, particularly for flooding. In some instances, getting insurance at all might be challenging. Be sure to factor potential premiums into your overall budget when deciding whether a property is affordable.

4. Work Closely With Your Conveyancer

A responsible conveyancer will go beyond the standard checks and reports by obtaining a climate report as part of their due diligence. This report is specifically designed to highlight potential climate risks associated with a property, such as flooding, subsidence, or coastal erosion. By analysing these risks, the report provides valuable insights into how climate change could affect the property's long-term value and safety.

For home buyers, this added step can be a game changer. The climate report not only flags immediate concerns but also identifies potential future risks based on climate projections. For example, properties in low-lying coastal areas might be at risk of erosion over the next few decades, while others near water sources could face increased flooding threats due to changing weather patterns. Understanding these risks before completing the purchase ensures that buyers are fully informed, reducing the likelihood of unexpected surprises down the line.

With this information in hand, you can weigh up the risks and adjust your plans if needed. It might mean negotiating the purchase price, budgeting for necessary mitigation measures, or even rethinking your choice altogether. 

Buying a home is a significant financial and emotional investment, and climate risks have become an important part of the equation. By understanding the risks, factoring in long-term impacts, and working closely with professionals like conveyancers, you can navigate these challenges and find a home that suits both your needs and your peace of mind. A property that stands up to climate risks will not only protect your finances but will also provide long-lasting security for you and your family.