Energy-efficient homes face rising flood and subsidence risk

Nearly 9.5 million energy-efficient homes are projected to face flooding or subsidence risk by 2055, an analysis reveals.

Property data firm TwentyCi found that homes with stronger EPC ratings appear more exposed to long-term environmental risks than less efficient stock.

It says that 37% of homes sit at EPC D, with a further 35% at C.

Set against environmental risk indicators, however, higher-rated properties show greater exposure to both flooding and ground instability.

EPC mortgage suitability

The firm’s chief executive, Colin Bradshaw, said: “While energy performance certificate (EPC) ratings remain a critical tool in assessing mortgage suitability, analysis of UK residential property data shows they do not reliably indicate exposure to key environmental risks such as flooding and ground instability.

“In fact, some of the UK’s most energy-efficient homes are also among the most vulnerable to flooding and subsidence.”

He added: “For lenders, that creates a potential blind spot in portfolio risk.

“To build truly resilient mortgage books, lenders need to assess energy efficiency alongside a broader range of environmental risk factors.”

EPC flood risk

Flood risk is highest among EPC G-rated homes, where 5.65% are already classed as high risk, rising to 6.94% by 2055.

B-rated homes follow closely and 5.27% are currently high risk, increasing to 6.52%, which is equivalent to more than two million properties.

The firm says that homes rated A to C show higher exposure to flood risk than those in bands D to G.

Mr Bradshaw said: “As climate pressures intensify, the data underscores the need for a more holistic approach to mortgage underwriting.

“Relying solely on EPC ratings could leave lenders exposed to hidden risks, particularly within segments of the housing market traditionally considered ‘safe’.”

EPC subsidence risk

There also appears to be an issue when looking at subsidence risk with B-rated homes ranking highest, with 6.74% currently exposed.

That figure is projected to reach 23.29% by 2055, affecting an estimated 7.4 million homes.

Across the bands, the same pattern holds with higher EPC-rated properties show greater exposure to subsidence than less efficient homes.

Coastal erosion risk shows a different risk level with G-rated homes being most exposed at 0.09%, followed by F-rated properties at 0.04%.

While the numbers are smaller, the impact is often total loss, the firm warns.