Methamphetamine - managing the risk

Meth contaminated properties have been generating headlines, and for landlords, their presence is a potential concern. While the scale of the problem is unknown, those who end up owning a meth contaminated property could face losses in several areas.

What is methamphetamine?

Methamphetamine, commonly known as 'P' or crystal meth, is a toxic and addictive drug. Side effects of its use can include mood swings, paranoia, aggression, anxiety and insomnia. Extended periods of exposure to the drug can lead to chronic health effects including cancers, brain damage, liver and kidney damage and birth defects.

What is the issue for landlords?

Rental properties can become contaminated when tenants recreationally use or manufacture meth on the premises.

The contamination levels vary depending on the situation - manufacturing or 'cooking' meth can result in homes needing to be stripped and cleaned.

Our property managers take the risk of contamination seriously. We encourage landlords to be vigilant in having their properties tested if there is any suspicion that there could be any traces of meth from previous owners or tenants.

What do I do if I suspect my property is P contaminated?

If you have any suspicions that your rental property could have once contained a meth lab or user, don't take chances. Put yourself and your family in your tenants'shoes.

If you'd like to arrange for your property to be tested, talk to your property manager about the right method for you.

Bear in mind, if a landlord rents out a property that is contaminated, they are breaching their obligations under the Residential Tenancies Act 1986, as well as other legislation such as the Building Act and the Health Act.

Insurance cover

Your insurer will cover the cost of decontaminating and restoring your property if you find out it’s been turned into a mini meth lab, right? Wrong.

There are a few things to look out for in your policy:

1. Exclusions - some policies may outright exclude drug-related damages

2. Caps on the amount of cover available - some policies limit cover for loss to $25,000 - which can disappear very quickly due to the high costs for decontamination

3. Meeting certain obligations as a landlord - some policies detail a list of actions that landlords must take to be covered for drug related contamination. This can include:

• Exercising reasonable care in the selection of tenants by at least obtaining satisfactory written or verbal references
• Completing an internal and external inspection of the house at least every three months and upon every change of tenant
• Keeping a written record of the outcome of each inspection so you are able to provide a copy of the record if requested.

4. Proving the contamination happened when you were insured - in this scenario, you would need to do the testing upon taking out a policy so that you can prove when the contamination occurred.

An important thing to bear in mind when looking at insurance cover for unlawful substances, is that each case is looked at on an individual basis.

As every insurer has a different scheme, our property managers encourage landlords to have a close look at what exactly their policy covers.