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When Homes Become Heat Traps: Why Overheating is the Next Climate Risk for Real Estate Portfolios
Europe’s hottest summer on record has turned many homes into heat traps. What once was a comfort issue is now a material climate risk, threatening health, affordability, and property values.
A Growing Threat
Across Europe, recent summers have exposed a new and growing crisis: our homes are overheating. This summer 2025 marked the hottest on record for England, with outdoor temperatures peaking around 35°C in parts of London, putting seriously high pressures on homes not equipped for summer heat. Once seen primarily as a comfort issue, overheating is now a material risk to both health and finance that cannot be ignored.
At SkenarioLabs, we see overheating as part of the same climate risk landscape as flooding, subsidence, and coastal erosion: risks that lenders, investors, insurers, and housing providers must now integrate into core decision-making.
Structural Drivers of Overheating
Overheating in buildings is a result of a combination of high outside temperatures, solar gains (solar radiation through non-opaque building parts) and internal gains through building occupancy and electrical appliance usage.
Types of buildings that are particularly exposed to overheating:
- Building typologies with high internal gains; offices and commercial buildings. In residential buildings in particularly densely populated apartment buildings.
- Buildings positioned in dense urban blocks or with large facade areas and windows facing excessively to the main direction of sunlight (South in the Northern hemisphere).
- Buildings with insufficient options for ventilation and/or no A/C.
Overall, these drivers are often intensified in urban areas, where the urban heat island effect – the tendency of dense, built-up environments with limited greenery to trap heat – pushes local temperatures higher than in surrounding rural areas.
Figure 1: The urban heat island effect occurs when dense built-up areas with concrete, asphalt, and limited greenery absorb and trap heat, making cities noticeably warmer than their surrounding rural areas. (Source)
The Scale of the Problem
Recent news coverage has highlighted the scale of the issue. The Guardian recently wrote about residents of new-build apartments in London having begun posting signs in windows: “Don’t buy these flats. Too hot.”, warning potential buyers not to purchase homes that turn into heat traps each summer.
This is my flat. Leaside Lock development in Bromley-by-Bow. They already discovered 2 sections of my MVHR weren’t fitted correctly. It’s still like living in an oven even though this has been ‘fixed’! @GuinnessHomes #leasidelock pic.twitter.com/dAH6GidB0f
— Aidan Sheehan (@aidan_sheehan) June 22, 2024
Poor ventilation and highly insulated designs, intended to improve energy efficiency in winter, have left many households sweltering indoors during heatwaves. Yet building regulations remain far more focused on keeping heat in during winter than keeping it out in the summer. According to the CEO of the UK Green Building Council (UKGBC) Simon McWhirter, the UK’s upcoming Future Homes Standard (2027) still lacks meaningful protections against dangerous heat or the amplifying effect of dense urban environments.
The social dimension is stark. Research has shown that overheating does not affect all households equally. Low-income families and minority ethnic groups are three times more likely to live in dangerously hot homes compared to the wealthiest households. Nearly half of the poorest fifth of UK families face overheating risk.
Implications for the Real Estate Sector
This is not only a climate resilience challenge, but also a systemic property finance risk. Overheated homes are harder to sell and mortgage, and often require costly retrofits, affecting affordability and loan performance. For asset managers and investors, overheating threatens long-term value and tenant satisfaction, with retrofitting for cooling becoming an inevitable capital expense. Insurers, meanwhile, face a future of rising claims, whether from damaged building materials or health-related liabilities. Developers and housing providers risk creating stranded assets if new homes continue to be designed without adequate summer resilience.
Beyond financial implications, overheating is also a question of human survival. This summer’s late-June to early-July heatwave caused thousands of excess deaths across Europe. Research shows that climate change tripled the toll, adding around 1,500 extra fatalities across major cities, including hundreds in Madrid, Paris and London, compared with what would have been expected without global warming.
These figures underline that overheating is not an abstract risk, but a measurable and escalating consequence of rising temperatures across the continent.
From Risk to Strategy
Architects and building engineers have come up with multiple different active and passive measures that can be applied in the construction phase or through retrofits to mitigate overheating.
Some of the most common passive cooling methods include:
- Installation of solar blinds. In particular external blinds or brise soleil help regulate heat gains from solar radiation through windows.
- Where the land-use and surroundings allow for it, large deciduous trees around buildings help create a moderate micro-climate and limit solar radiation to building facade and through windows. After they drop their leaves in the autumn, deciduous trees will allow more solar radiation through during the winter time when that effect is desirable.
- Green roofs have a natural cooling effect.
- Windows with low g-value (i.e. highly reflective) glazing will block some of the solar radiation.
- High albedo facades and rooftops help reflect solar radiation.
While passive or structural cooling methods by themselves are sometimes not enough to sufficiently reduce the excessive heat, they can increase the effectiveness of active cooling methods.
Common active cooling methods include:
- Natural or mechanical ventilation, fans and night purges through windows. While not a cooling method per se, mechanical ventilation and ceiling or pedestal fans increase air flow speed which in turn improves on-skin evaporation, allowing for higher cooling set points. During the night the external temperature is usually lower than the day temperature or indeed the temperature inside an overheated building: efficient ventilation during the night helps to cool down the building.
- Air-source heat pumps are commonly used source cooling source.
- Even more efficient methods are ground- or water-source heat pumps or district cooling, which can be utilized to provide the cooling in buildings where the infrastructure is available and cooling loads are generally substantial. When cooling demand is moderate, ground- or water-source heat pumps can be utilized in free-cooling mode (i.e. without running the compressor), which helps save energy in the process.
- Building automation system can play a critical role in controlling and adjusting temperature set points, ventilation rates and adjustable shades.
Looking ahead
Europe’s summers are only getting hotter. The question is no longer if overheating will affect property portfolios, but when and how significantly. Those who act now, by mapping, modelling, and mitigating the risk, will be best placed to protect their customers, their communities, and their investments.
At SkenarioLabs, we are already working with clients to bring overheating into their climate risk strategies. If you would like to discuss how we can support you, our team would be delighted to help.
