Johane Murray
Brodies, Edinburgh
johane.murray@brodies.com

Nakita Kaur
Brodies, Edinburgh
Nakita.kaur@brodies.com

Introduction

The Law Society of England and Wales has issued new guidance on advising clients about climate change risks in property transactions. This article summarises the main points, including the seven-step framework, liability considerations and practical advice for solicitors acting in different transaction types.

Climate change is no longer a distant concern for the property market. It is an immediate issue that solicitors encounter daily. From extreme weather to tightening energy efficiency regulations, climate risks increasingly influence property viability, value and marketability.

On 12 May 2025, the Law Society of England and Wales published its practice note ‘Climate change and property’, building on its 2023 guidance on professional duties across practice areas.^[1] The updated note provides a structured framework for addressing climate-related issues in property transactions.

This article highlights key aspects of the guidance, emphasising legal, not physical, advice, the seven-step advisory framework and practical considerations for acting for different types of clients.

Why this guidance matters

The property sector faces multiple layers of climate risk. Physical risks include flooding, subsidence, coastal erosion and overheating, all of which can impact insurability and usability. Transition risks stem from new regulations designed to reduce carbon emissions, including Minimum Energy Efficiency Standards (MEES), building regulations and the forthcoming Future Homes and Buildings Standards. Legal risks arise when these physical or regulatory risks translate into potential liabilities, such as fines for EPC non-compliance or planning delays due to flood adaptation requirements.

Solicitors are not expected to advise on technical or physical aspects of climate change, such as building resilience or flood engineering solutions. Instead, the Law Society makes it clear that their role is to advise on the legal implications of potential climate risks identified during the transaction.

Types of climate risk

Climate risks generally fall into three categories:

1. Physical risks that are the direct effects of climate change, such as flooding or subsidence.
2. Transition risks that are linked to regulatory or policy changes that may affect compliance or operational costs.
3. Legal risks that emerge when these physical or transition risks lead to disputes or obligations, or where a developer may experience delays due to planning conditions, for example those designed to mitigate flood risk.

Advising clients: a structured approach

The Law Society suggests a seven-step framework.

1. Explain the issue to the client
   Inform clients that climate risks could affect the transaction and clarify what you will and will not advise on. Encourage them to consider a climate risk search or consultation with a building surveyor.

2. Advise on potential legal liabilities
   Highlight liabilities that could arise from identified risks, such as MEES compliance or planning obligations.

3. Consider lender requirements
   If acting for a buyer or borrower, assess whether the lender requires a climate risk search.

4. Record client decisions
   Document whether the client requested a climate risk search, and any other steps they have chosen to take.

5. Report on climate risk search results
   Where a search has been obtained, explain that you cannot provide technical interpretations or financial advice on the findings. Direct the client to a specialist where necessary.

6. Document advice in writing
   Include relevant advice and limitations in the report on title or engagement letter.

7. Seek instructions if acting for a lender
   If a search reveals risks, confirm whether the lender wishes to proceed with the loan.

Defining the scope of advice

Clarity is key to managing expectation. Solicitors must establish whether they or the client will commission climate risk checks and reiterate that their role is limited to legal advice. While they can interpret search results in a legal context, solicitors cannot advise on technical, insurance or financial matters. Where energy efficiency standards apply, it is also important to flag the property’s energy efficiency rating and anticipate future tightening of requirements.

Climate risk searches: what clients need to know

Desktop climate risk searches, often added to environmental searches, provide a preliminary assessment of long-term risks, such as flooding, overheating and subsidence. These are screening tools rather than definitive evaluations and do not replace physical surveys or specialist reports. The modelling used may evolve over time, and some transition risks like retrofitting obligations may not be fully captured.

Solicitors commissioning a search should clarify who can rely on the report, whether the provider carries professional indemnity insurance and whether it offers analysis or support for queries. If a client declines a search, the decision and its implications should be clearly recorded. Government flood risk services provide useful context but cannot substitute for transaction-specific assessments.

Understanding your client’s risk appetite

Not all clients view climate risk the same way. Early discussions about their objectives and priorities are essential. Solicitors should explore whether the client intends to occupy or let the property, the investment horizon, redevelopment plans and any net zero or ESG strategy.

Understanding these factors shapes advice on searches, insurance and contractual obligations. For instance, a developer will focus on planning compliance and future proofing, while an investor may prioritise marketability and liability mitigation. Documenting these discussions ensures a clear record, particularly if minimal checks are requested.

Tailoring advice by client type

Climate risk affects tenants, buyers and lenders differently. Occupational tenants with long leases face prolonged exposure, making insurance and future compliance costs key considerations. Green lease provisions and sustainability commitments should be reviewed carefully, particularly around responsibilities for future upgrades.

Freehold buyers or leaseholders must assess whether adaptation costs can be recovered through service charges and ensure insurance coverage addresses identified risks. Lease clauses allowing termination or rent suspension in response to climate-related damage can significantly affect financial exposure.

Lenders increasingly incorporate climate risk into due diligence. Some may require searches or impose funding conditions to manage potential exposures. Solicitors should ensure that borrowers’ insurance meets lender requirements not just at completion but throughout the loan term. When raising enquiries, it is unrealistic to expect sellers or landlords to confirm the physical impact of climate risks. Instead, focus on legal obligations such as covenants, warranties or indemnities that could shift liability.

Conclusion

Climate change is now a core consideration in property transactions. Solicitors can manage professional risk and support clients by clearly defining the cope of advice, documenting client decisions and liaising with specialist advisers where necessary. The Law Society’s guidance provides a practical, proportionate framework for ensuring legal advice is accurate, commercially relevant and responsive to the evolving landscape of climate-related property risks.^[2]

Notes