Methamphetamine: Managing the Risk

With availability at an all time high, and price at an all time low, the issue of Methamphetamine and how it affects properties, landlords and tenants is not going away.

One of the most significant issues currently facing New Zealand landlords is that around Methamphetamine (also known as meth, crystal meth, or ‘P’). What makes methamphetamine such a problem is that it’s a drug that can be made from scratch, without any experience, with easily accessible chemicals, using basic household equipment, and unfortunately the ‘cooking’ instructions are as freely available as the ingredients. With a high percentage of this drug being produced in rental properties, it is important for all investors to understand their responsibilities around this issue as well as the risks it can present for them, their tenants, and their properties.

What is it and why should I be concerned?

Methamphetamine is a toxic and addictive drug. Effects of it’s use can include mood swings, paranoia, aggression, anxiety and insomnia, and extended periods of exposure can lead to chronic health effects including liver, kidney and brain damage, cancers, and birth defects. Health, careers and families can be destroyed, and we are now seeing the financial consequences meth has on individuals who have absolutely no direct contact with the drug – unsuspecting landlords and tenants.

Rental properties can become contaminated through recreational use or through manufacture on site, and contamination levels will vary depending on the situation, but can lead to dangerous physical side effects for those in the property, as well as having the potential to cost an investor tens of thousands of dollars in decontamination, testing, cleanup and any lost rent associated with the property being declared ‘uninhabitable’. (If police become involved due to a tenant’s use or manufacturing of the drug, they are obligated to report your property’s contamination to the local council authorities which can result in permanent public record, on your property’s LIM – potentially damaging the resale value of your investment.)

How can I minimise the risk?

As a landlord, it’s important to know your responsibilities around meth contamination – both for your tenants’ safety, and to ensure that you’re adequately covered.

It is now more important than ever to

• Do thorough tenant background checks
• Complete a methamphetamine test at the beginning and end of every tenancy (this is the only way to place liability on tenants and prove you have provided a safe and sanitary dwelling) – You would also need to do the testing while you were insured, or when taking out the policy, so that you can prove when any contamination occurred.
• Have the right insurance cover (in many cases, there is no cover if the contamination happened through use, rather than manufacture, however around 90% of cases are caused by use) – Every insurer has a different policy, and when looking at cover for unlawful substances, each case is looked at on an individual basis. – There are a few things to look out for in your policy:
  Exclusions – some policies outright exclude drug-related damages
  Caps on the amount of cover available – some policies limit cover for loss to $25,000 – which can disappear very quickly due to high decontamination costs
  Certain obligations you must meet as a landlord – which may include a detailed list of actions
• Include a statement in your tenancy agreement allowing you to test the property for meth (at your discretion) – and keep written records of each inspection outcome.
• Know what to look for during inspections.

Common indicators of meth production can include:

• Windows blacked out/covered or obscured from view
• Chemical odours (solvents mainly)
• Empty chemical containers lying around outside
• Exhaust fans
• Paranoid secretive or odd behaviour from occupants
• Access denied to landlords/neighbours and agents
• Frequent visitors at odd hours
• Occupants may be unemployed however they possess nice cars and expensive toys
• Expensive security and surveillance equipment
• Occupants of the residence constantly going outside to smoke
• Yellow or brown discolouration on walls, drains, sinks and showers
• Smoke alarms that are removed or taped off
• Jars containing clear liquid with a red or white solid on the bottom
• Jars containing iodine or dark shiny metallic balls inside jars
• Jars containing red phosphorous or a fine dark red or purple powder
• Coffee filters containing a white pasty substance
• A dark red sludge or small amounts of shiny white crystals

How do I protect myself and my property?

Although not a clearly defined legal requirement Ray White New Zealand recommends that all landlords have an independent methamphetamine test undertaken pre and post tenancy to ensure any contamination and subsequent liability can be identified as early as possible. We believe in investing a few hundred dollars in a non-invasive swab test, and making it part of your due diligence can end up saving you thousands in the long run. Starting the process of regular testing and notifying prospective tenants, will protect landlords, in turn protecting new tenants and help prevent such incidents occurring in your investment property in the first place.

Do I legally have to test for meth?

While there is currently no law stating meth testing is a requirement for landlords, if a landlord rents out a property that is contaminated, they are breaching their obligations under the Residential Tenancies Act 1986 (to provide a clean property to incoming tenants) as well as responsibilities under other legislation such as the Building Act and Health Act to ensure the safety of those who inhabit their investment property. Testing is required to ensure liability and financial repercussions of any possible contamination can be placed back to those who caused it. A lack of a negative test at the beginning of a tenancy can also leave landlords open to legal challenges from tenants if a later test comes back positive during the time of their tenancy, even if the current tenants themselves were the ones to cause the contamination.

Understanding the types of testing

Currently there are no standards or regulations around meth testing – the industry is unregulated and there have been reports of an increasing number of rogue operators. Fortunately new stands and rules for testing and decontamination, analysis, health and safety and environmental regulators and property owners, managers and insurers are due to be released later this year. Our property management team are taking a responsible and proactive approach to a growing problem by working with reputable agencies who perform non invasive tests and use NZ accredited laboratories to give an indicative result of the property.There are a range of testing methods to chose from:Individual samples – multiple swabs are processed individually. This gives a clearer view of the problem and location enabling quicker remediation although does come at a higher upfront cost.Lab composite – the lab run a combined test from the individual swabs taken to yield an average reading. If meth presence is detected then they can proceed to individual analysis. This service has a higher upfront cost however yields lower overall costs if further analysis is needed.Field composite – individual samples are combined onsite. Lower costs upfront, although results can be misleading and further site visits and testing may be required – incurring unnecessary costs and delays.If you’d like to arrange for your property to be tested, talk to your property manager about the right method for you.

Need help, or more information?

Landlords who end up owning a meth contaminated property could face losses in several areas. Which is why our property managers are provided with a comprehensive Methamphetamine risk mitigation policy aimed at educating all staff on how to recognise and deal with any such activity should it ever occur in one of our managed properties. We provide staff with a full suite of appropriate clauses and acknowledgements for Tenancy Agreements that ensure incoming tenants are aware this issue is something we can and will be checking for, and clauses that allow us to do so.

We also provide staff with the 24-hour support of tenancy law specialists to help advise and guide our clients through these situations to ensure the right steps are undertaken should contamination be found.

As professional property managers we have a responsibility to understand the issue of methamphetamine and pass on this knowledge to our landlords and tenants. We keep up-to-date with all the latest industry regulations and standards, updates from the Tenancy Tribunal and are trained to know what signs to look for during an inspection.

Talk to us for information on our experience, services, and knowledge – after all, investment properties should make money for you. Not work.

Ray White Property Management 09 430 0075