Owning a rental property can sometimes be a risky business, even the most savviest of investors can fall victim to any number of serious issues. One problem in particular plaguing New Zealand rental properties is the rise of drug labs, which is where tenants are producing methamphetamine (also known as meth or P).

In 2006, 65 per cent of P labs found by Police were located in rental properties. Three years later this had increased to 75 per cent. Across the country it is estimated that police only ever locate 5-10 per cent of all P labs in rental properties. This means that landlords have no choice but to keep a more watchful eye on their investment to avoid meth contamination damage.

Meth contamination: What are the costs involved?

Housing New Zealand estimates the cost to test a property to be around $2,750 and as much as $10,000 to decontaminate a property. After decontamination, the property will need to be re-tested for an additional $1,600. Properties with high levels of contamination may have to be demolished.

Where does the responsibility fall - Landlord or tenant?

It is extremely important that landlords and homeowners have their properties tested for meth contamination before buying and in between tenants. Particularly as landlords can be liable for any issues that face future tenants of the property.

One landlord in the Waikato was forced to pay out $7,500 to tenants after they became sick from methamphetamine contamination.

One landlord in the Waikato was forced to pay out $7,500 to tenants after they became sick from methamphetamine contamination. Even though the landlord had just bought the property and had no dealings with the previous drug related tenants, the Tenancy Tribunal found the landlord culpable, and this result should serve as a warning for all landlords to have their properties tested.

If your property does test positive for P contamination and the police are involved, then the council is legally obliged to record this against the Property’s LIM report.

What can landlords do to protect their investment?

Before confirming new tenants, check and double check their references to make sure they have a good rental history before signing a tenancy agreement. Make regular inspections and have an idea of what to look for. While you must give 48 hours notice, it’s more difficult to ‘cook meth’ if they have to keep moving equipment. Tenancy Services says a landlord can make inspections every four weeks with 48 hours notice. So, take a camera with you and photograph anything that looks suspicious.

Read more: The time cost of managing your own rental property

Where will insurance help?

When it comes to insurance - unfortunately most companies generally won’t pay out if your rental property is turned into a meth lab, due to particular clauses in their contracts. Of course this is a scary prospect for all landlords that they are unable to cover themselves.

Reducing the risk of meth contamination

So what can you do to reduce the risk of your rental property being used as a meth lab?

The main recommendation we can make is to hire a property manager who knows the law and what to look for, so you can hopefully avoid this potential problem. Testing for methamphetamine is a service that some property managers now include as part of a final inspection - and it is important to ask whether your current property manager provides this service.

If you are managing your rental on your own - do you understand how to get testing carried out? And also what the different results actually mean?  

Don’t get ripped off by meth testing companies

While meth contamination of rental properties are a serious problem for New Zealand landlords, there is little guidance on whether P at ‘trace levels’ actually poses a risk to human health.

Unfortunately this has led to some companies taking advantage of this uncertainty - charging hundreds, sometimes thousands of dollars to test for traces of methamphetamine and tens of thousands to clean it up, when this may not be necessary.

So in this case, it pays (literally) to have someone in ‘the know’ to assist you with getting these tests carried out - as there is no doubt the repercussions of things going wrong could be extremely costly.  

Worried about letting your home to untrustworthy tenants? Learn how to avoid risky tenants with our free guide: