Climate Resilience – How can commercial landlords prepare?

The impact of climate change on the world is ever more visible for us all to see – from the UK’s Storm Éowyn and the devastating wildfires in the US, to the latest floods in Gran Canaria.

Global temperatures continue to rise, the number of extreme weather events are going up, and so too is the expected number of extreme rainfall days.  The latest prediction is that London could end up colder and wetter because of climate change, and changes to the Jetstream.

According to the Environment Agency, 2.4 million properties are at risk from rivers and the sea in England, 200,000 of which are in the South East alone.

High impact weather events like extreme temperatures or rainfall cause significant disruption and can affect everything from health, transport, agriculture and energy to commercial property.

In 2014 and 2023 Staines and Hastings were badly affected by severe flooding when several offices and the Priory Meadow Shopping Centre flooded in the towns, causing costly damage for the occupiers and landlords alike.

Faced with ever more extreme weather events such as flooding and heatwaves, what should landlords and investors of commercial property do to manage climate risk as best they can?

David Thomas, Head of Energy & Sustainability at Vail Williams, explores a range of practical steps and advice to build climate resilience and risk management into your commercial property management.

Practical resilience planning

If you already own a property asset that lies within an existing flood risk area, think about what you can do to mitigate potential damage within your building.

What if my asset is affected by an extreme weather event?

In the first instance, it is important to check that your tenant(s) and their employees are safe. Once you’ve established this, contact your insurance company.

In order to receive the necessary payout, you may need to demonstrate how you have lessened the potential impact of climate risk on the asset in question.

Stuart Adamson, Claims Manager at Macbeth Insurance Brokers based in the Thames Valley, advises:

“During severe weather events, insurers typically expect policyholders to take reasonable steps to prevent further property damage, known as mitigation. It’s important to maintain your property well, such as inspecting flat roofs for any issues and ensuring roof tiles are intact and undamaged.

“As a general rule, property owners are responsible for building insurance. However, rental agreements may assign repair responsibilities to tenants, so it’s advisable to review rental and lease agreements to confirm obligations.”

You should also think about contacting a business rates expert because if commercial premises are flooded causing damage, you may also be entitled to relief from business rates as a result of a material change in circumstances.

Who pays for the damage?

Most business leases include an obligation on the landlord to insure the property and most landlord insurance policies will cover storm damage.

However, if the property has not been well maintained, you could find that your insurer refuses to pay because you have not met with the obligations of the insurance policy.