A building's environmental resilience is directly tied to its financial health: non-compliant properties risk being unsellable or unlettable, with new legislation requiring all residential rental properties to achieve at least a C-rated EPC by 20301.
At the same time, climate-driven claims have risen sharply, with storms and floods pushing UK property insurance payouts to £585 million in 20242. These pressures force block managers to rethink ESG strategies to protect asset value and limit financial losses from extreme weather.
What drives the 'resilience gap' in the UK's real estate sector?
The 'resilience gap' explained
If there is a mismatch between current and desired levels of resilience, properties may:
- Lose access to affordable or adequate insurance
- Face a lower market value due to a higher perceived risk
- Struggle to meet lender requirements or attract investment
- Miss key energy efficiency compliance targets
- Require costly upgrades under time pressure
How safe are your buildings?
Insurance premiums have long been based mainly on past claims data, but insurers now want proof that buildings are ready for such risks.
Adopting the following measures can make a difference:
- Check property valuations to make sure you are not underinsured
- Review EPC ratings and energy use across buildings
- Identify gaps in flood or fire resilience
- Prioritise upgrades that improve both insurance outcomes and building performance
- Plan improvements in stages to meet regulatory and market expectations
- Ensure that occupants are aware of their responsibilities
If these are not in place, insurers may increase excesses, add exclusions or decline to offer cover entirely. This is already happening in many areas with flood exposure or poor energy ratings.
The UK property sector faces two immediate pressures: new energy rules and rising climate risks. For the former, landlords need a minimum EPC rating of E to let out a property. From 2030, MEES (Minimum Energy Efficiency Standards) will increase this to EPC B for all non-domestic buildings. However, almost 80% of commercial properties fall short of that standard, putting them at risk of becoming unlettable1.
Extreme weather is driving up insurance claims. In 2024, average weather-related payouts reached £6,200 for households and £17,400 for businesses3. This combination of tighter regulation and higher climate losses has widened the 'resilience gap' — leaving some buildings compliant and insurable, with others exposed to falling value and market exclusion.
Services like EPC Plus reports which provide actionable recommendations for refurbishment and dynamic simulation modelling can assist in managing these issues while ensuring the project scope remains consistent with ROI targets. Owners who act now to upgrade and plan for compliance will be better positioned to protect asset value and insurability.
A new imperative for block managers
The connection between ESG and insurance is now a core issue in commercial, residential and student accommodation. A property that fails MEES cannot be leased, and landlords can face penalties, including fines of up to £150,0004.
For commercial apartments, meeting stricter regulations and tenant demands for green buildings is essential, as non-compliance can lead to higher insurance costs and devalued assets.
A 'resilience gap' in residential blocks makes it harder for residents to secure mortgages, resulting in reduced asset value. Meanwhile, student living apartments require a decisive ESG strategy to attract modern tenants and secure affordable insurance, which is crucial for long-term profitability.
Time is of the essence
To build an efficient sustainability strategy, owners can start by assessing their buildings through accurate valuations, climate exposure modelling and energy audits.
ESG upgrades should be aligned with measures that strengthen insurability — such as installing sprinklers, improving flood resistance and raising EPC ratings. Phased capital investment programmes support MEES compliance and build confidence with insurers, protecting both property value and market viability in the long term.
Don't wait to tackle the 'resilience gap'.
Tip: You don't need to do everything at once. Examine the facts. What do your buildings need to remain safe, compliant and easy to insure over the next 5 - 10 years?
