On 12 May 2025, the Law Society published its "Climate Change and property" Practice Note, the full text of which is available here.
We reported previously on their 2023 guidance note which covered the impact of climate change on solicitors. The 2025 Practice Note focuses on "what solicitors should do in relation to climate change risk when advising on property transactions" and extends to residential and commercial real estate lawyers.
The Practice Note represents the Law Society's view on good practice, but is not legal advice. It is helpful, however, as this is an area that could create increased risks for the unwary.
The Law Society has identified three categories of climate change risk in the context of property transactions:
- Physical risks, namely events that impact properties or the natural environment for example flooding
- Transition risks - in other words, changes to the legislative landscape arising from the UK's 2025 net zero goal, and
- Liability or legal risk, namely negative risks arising from transition or physical risks
The impact of physical risks is obvious and such risks can manifest themselves in the form of issues such as insurability, sales, development and financing.
We predict that transition risks could impact property value, transaction cost or potentially cause reputational damage if, for example, the property which is the subject of the transaction does not meet any new standards that are introduced. As far as any new standards are concerned, however, the Government's approach to net zero is uncertain at the moment and this uncertainty in itself could create exposures.
In the Practice Note, the Law Society offers insight on the advice that real estate lawyers should provide depending, of course, upon the scope of the retainer agreed with the client.
In the Law Society's view, however, lawyers should be advising on amongst other things, the potential consequences of transition risks, who is responsible for addressing them and where the liability for any cost of doing so will fall.
Lawyers should advise on the legal implications of physical climate risks as well as potential liabilities arising from legal risks. How should they do this in practice? In our view, lawyers should advise clients to obtain surveys and appropriate climate risk searches, and should be clear with their clients about who will be making the enquiries and whether they fall within the scope of the lawyer’s retainer so that there are no misunderstandings.
We are operating in changing times, however, which means that it will be essential over the coming years for real estate practitioners to take close interest in the developing landscape – and transition risks in particular – in order to adapt practices to emerging areas of risk.
The climate risk issues that the Law Society has identified should also inform the enquiries that the buyer’s lawyer will raise with the seller as part of their pre-contact enquiries.
Finally, lawyers cannot afford to overlook the question of whether buildings insurance will be available depending upon the issue affecting the property.
Scoping out the retainer
The issue of the scope of the lawyer’s retainer has been and remains a fertile area for claims against the profession when misunderstandings arise or where the nature of the retainer changes over time but the retainer is never formally updated.
The Law Society has included sample wording in the Practice Note which lawyers can adapt to scope out their retainers and reports on title with climate risks in mind.
The Practice Note also deals with when lawyers should not offer advice. For example, advising upon some aspects of physical risks would be outside solicitors' competency and clients should always be referred to specialist advisers for example surveyors.
Real estate lawyers should:
- Ensure that any precedent reports and retainers are updated to reflect the Law Society's recommendations
- Train their lawyers to ensure they can provide advice on climate risk where appropriate, and closely monitor legislative and other relevant developments, and
- Engage with search providers and other professionals to ensure that they understand the services that they can provide. This is important because other professionals are also reacting to the climate change issue and, for example, RICS published Global Standards in January 2025 which state that valuations must include the potential impact of significant environmental, social and governance factors on value
