Climate Contract Playbook Edition 3
170
[Marni’s clause]
The Origin Story
Child’s name
Marni’s clause
Full name
Report on Title – Climate Change Clauses
Practice Area / Sector
Real Estate, Commercial Property
Standard Reports on Title for the acquisition of property in the UK do not include statements relating to the future risks of climate change that may affect the property. Given the wide acceptance of climate change science and the articulation of climate change risks by the Bank of England and others, this is something buyers should be aware of prior to purchase.
Issue
In the absence of climate change risk searches being available, standard climate change statements should be added to a report on title to make buyers aware of the future risks that may affect the property.
Solution
The built environment contributes around 40% of the UK’s total carbon footprint. 89 The Bank of England has observed that more building is being undertaken in high risk areas 90 . There are existing laws to make it illegal to lease commercial property that has an Energy Performance Certificate rating that is either F or G. If the UK is to hit its net zero target then it is logical that in the future it may become illegal to rent properties that are not net zero. There are already tools available to search for land projected to be below annual flood level in 2050 91 .The average term of a UK mortgage is 25 years Reports on title are used in the acquisition of all UK property from commercial to residential and freehold to leasehold. The clauses will ensure climate change risks are brought into mainstream transactional awareness. The identification of risks will also mean there has to be a new focus on solutions such as how the property could be made more resilient to the effects of climate change. This should result in investment in buildings to make them more energy efficient. The key stakeholders that you think need to be engaged to deliver this Impact 1. Council for mortgage lenders 2. RIBA and RICS 3. Precedent and know how providers 4. Professional support lawyers 5. Private practice firms The proposed amendments will mean that climate change issues are a standalone section of the report, bringing the risks to the fore and prompting clients to consider obtaining professional advice on how the building will be resilient to the effects of climate change.
Context
Impact
Stakeholders
Application
89 https://www.ukgbc.org/climate-change/ 90 https://www.bankofengland.co.uk/knowledgebank/climate-change-what-are-the-risks-to-financial-stability 91 https://sealevel.climatecentral.org/maps/
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