Landmark Valuation Services has unveiled a new Climate Change Portfolio Assessment service design to help mortgage lenders to understand the future impact changing climates may have on existing property back books, as well as new mortgage applications.

Following the Prudential Regulation Authority’s (PRA) publication of a supervisory statement, which focuses on its increasing expectation for lenders to understand the financial risks to their businesses associated to climate change, the new service uses Landmark’s Valuation Risk Modelling tool combined with Landmark’s  property, location and environmental data.

By assessing the modelled data, mortgage lenders are able to understand whether future flooding, subsidence or coastal erosion may impact specific properties – as well as their insurability.

In addition, assessment relating to properties’ energy performance determines whether changes to energy efficiency policies may impair future property value or rental income.

In April, the Prudential Regulation Authority (PRA) published the policy statement “Enhancing banks’ and insurers’ approaches to managing the financial risks from climate change – PS11/19”, which considers how firms can incorporate the financial risks from climate change into existing risk management practice and use (long-term) scenario analysis to inform strategy setting, and risk identification and assessment.

Mike Holden, managing director, Landmark Valuation Services, said: “Taking into account the increasing expectations on banks to assess financial risks that may result from the changing climate, we’ve combined the strength of our Valuation Risk Model decisioning platform with our Group’s wealth of property, land and environmental data to provide lenders with a new climate change risk assessment service.”

Richard Barnes, managing director, Landmark Insurance and Modelling Services, added: “With the UK Climate Projections suggesting that we will experience more extreme weather conditions, we can determine what impact perils, such as subsidence or flooding, may have on lenders’ mortgage back book portfolios and future applications. In doing so, lenders can proactively manage any associated risks.”